A local housing analyst says a flat-lined job market is a major reason why the housing construction market has plummeted in 2014.
According to figures released Wednesday by Canada Mortgage and Housing Corporation, total new home starts in Thunder Bay are down 49 per cent through June, compared to the same time period a year ago.
Builders have started 23 fewer single-family houses this year, dropping to 43 through the first six months. There were 10 fewer homes started last month alone than in June 2013.
Multiple units have also taken a hit this year, down from 62 to 22.
“We did expect to see a few more housing starts by now, but they really didn’t come,” said Warren Philp.
And the news doesn’t look like it’s getting any better any time soon, he added.
“We’re really not seeing that much on the permit front, which is kind of a precursor to more housing construction. We’re really not seeing enough to make us believe we’re going to have any kind of an earth-shattering year here in Thunder Bay.”
Having said that, the last four years have been slightly above average.
“We may be just settling back to more of a historic, more sustainable number for single-detached starts,” Philp said.
A strong re-sale market is also adding to the construction slowdown. Potential homeowners who previously chose to build because of a lack of inventory now have other options, he said.
“Now, if there are a few more listings on the resale market and they’re out there shopping for new construction or a resale, and there’s a few more resales on the market, maybe they’re opting for resales and not choosing to build,” Philp said.
The simple fix is a turnaround in employment levels.
With more people working, more people will be buying.
“Employment is key to the whole equation. We’d like to see stability with employers and we know that commodity prices have been tight, especially on the commodities side … Maybe some of those projects that really should be further advanced in Northwestern Ontario aren’t as far along as we had hoped and that might be creating this situation, to some degree, in terms of housing starts in Northwestern Ontario. “