Fraser Forum

Is red tape on new homebuilding in Calgary pushing newcomers to the suburbs?

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According to new Statistics Canada census data, the Prairies, and Alberta in particular, have seen the largest population growth in Canada over the last five years. Despite the economic downturn, the Calgary metropolitan area alone managed to grow by almost 180,000 new residents since 2011, which is nearly the equivalent of adding the population of Regina or Kelowna to the region.

However, population growth in the City of Calgary has lagged behind the regional average. While the city grew by an impressive 13 per cent, the region as a whole grew by 14.6 per cent thanks to explosive growth in communities such as Cochrane and Airdrie, which grew by 47.1 per cent and 42.3 per cent (adding 8,273 and 18,310 residents, respectively).

So why is growth in Calgary lagging behind the regional average? There are several potential reasons for differing growth rates among neighbouring municipalities.

Firstly, some communities offer greater employment opportunities. This factor actually works in Calgary’s favour. As of 2011, Calgary was the top destination for commuters from rapidly growing communities such as Cochrane, Airdrie and Chestermere, meaning these places are not necessarily employment hubs. This is therefore unlikely to explain the discrepancy.

Some communities might also offer more space and bigger backyards. However, all new homebuilding in municipalities within the Calgary Regional Partnership (including Calgary, Airdrie and Cochrane) must meet the same density requirements.

A lack of developable land could also limit a city’s growth. That’s unlikely, too, since Calgary still has open fields slotted for new homes.

Higher home prices can drive residents towards nearby communities with cheaper housing. This also doesn’t seem to be a factor in Calgary. As of the last census, the average home prices in Calgary, Airdrie, and Chestermere were all about $400,000. It’s safe to say, therefore, that places such as Airdrie and Cochrane are close substitutes for Calgary.

So the new census results do not make clear why Calgary is growing less quickly than surrounding communities. But another reason—a lack of new homebuilding in the city—may be to blame.

Fraser Institute research conducted last year compared the construction of new homes with the estimated desirability of various neighbourhoods, as well as the difficulty encountered by property developers in obtaining building permits. In the Greater Calgary, the study finds, more people would be living in Calgary or just across the border in Rocky View County, and fewer would be living in farther-flung suburbs such as Cochrane, had red tape on new homebuilding not been so onerous.

Indeed, it typically takes five months longer to obtain building permits in Calgary than in Cochrane. It also costs well over $10,000 more per housing unit, on average, to clear regulatory compliance hurdles to build in Rocky View County than in Airdrie.

Again, Calgary’s growth rate remains impressive—it hosted 80 per cent of the greater area’s population growth since 2011. But Calgary represents about 90 per cent of the region’s population, meaning its suburbs are shouldering more than their fair share of growth.

Calgary and its surroundings remain a premier destination for newcomers. The price of a barrel may fluctuate, but the region is still growing, and it’s done a remarkable job of housing new workers and their families. The rapid growth of suburbs such as Cochrane and Airdrie, however, may be more a symptom of red tape on new homebuilding in Calgary than genuine demand in these smaller cities. Calgary and Rocky View County should heed these signals before their housing soars out of reach for an increasing number of residents.


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