Local housing sector no longer a seller's market: CMHC

Thunder Bay housing starts were up slightly in 2015, but the news isn’t glowing.

The 168 single-detached homes built last year is at the low end of the 30-year-average. Overall 232 starts were recorded last year, boosted in part by 78 multiple-units, a dozen more than the year prior.

Canada Mortgage and Housing Corporation analyst Warren Philp said a changing marketplace has a lot to do with a decrease in home construction activity.

“The five years prior we were experiencing pretty strong seller’s market conditions in the resale market,” Philp said on Monday.
“So in those situations, when there are limited listings and a strong demand for homes in the resale market often that spills over into new construction and causes people to look at building, when there isn’t a lot of supply.”

The market has changed over the last 18 months or so, he said.

“It’s no longer a seller’s market. It’s moving toward a balanced market,” Philp said. “In fact I believe that during the first part of this year we’ll be declaring it a balanced market here in Thunder Bay. And in some cases it’s getting even softer than that.”

He laid the blame on slumping employment figures and a mining economy resting in the doldrums, slumping commodity prices and Ring of Fire stagnation not encouraging as much new development as once forecasted. He estimated there were 59,700 people employed in the city in 2015.

“When we back at 2013, that figure was nearly 63,000, so that’s a drop of (more than) 3,000 employed people in the city.”  
Philp said that hasn’t stopped people from building smaller rental units in Thunder Bay, which is why the city experienced a slight increase in that category last year.

The 20 semi-detached units built in 2015 are the most since 1996.

“Those are smaller units and more affordable to bring on stream for builders, and yet they’re new construction. You see the market moving a little bit in that direction, to multi-family housing with more affordable price.”

That all in, Philp said he is expecting a slight increase in 2016 in the single-detached category, mainly because new land will be coming on stream that will make it attractive for some builders to take a chance.

“It’s kind of a mixed bag, but overall we are kind of in a weaker situation, mostly because of that poor employment situation that we’ve seen lately.”