Canada Mortgage and Housing (CMHC) reports an increase in housing starts in most Northern Ontario cities.
“The building permits (for the North) are strong,” says Warren Philp, market analysis for CMHC.
In 2002, 50 housing starts were active in Sudbury, as opposed to 35 in 2001. North Bay experienced 16 starts this year, compared to 12 the year before, and Timmins rose from four starts last year to nine housing starts this year. In total there was an increase of approximately 35.4 per cent.
Based on the number of active permits across the North, CMHC can forecast possible trends in the months to follow.
“We anticipate next month’s numbers in housing starts to be strong,” Philp says.
Single-detached housing starts for 2002 year-to-date were at 230 in June, compared with 191 in the year 2001.
“That is a 20 per cent increase,” Philp says.
Most of the work is carried out in the second quarter of each year due to the nature of the Northern Ontario climate. However, if the number of housing starts does not decline in the slower months, it may be a sign of a resurgence in the housing sector.
“Although the numbers have been encouraging, there has to be an overall level that is higher than last years’,” says Carrie Vescio, acting Northern Ontario area economist with Human Resources Development Canada.
“As it is right now, it’s too soon to tell,” Vescio says.
Figures would have to continue to escalate for more than a year to constitute a boom in the housing market.
In the past, housing starts increased to 370 in 1985 to 983 in 1989, then fell to 563 in 1992. Although the figures presented today are nowhere close to any of the above numbers, they still represent an increase in the economy in spite of the out-migration experienced in the North.
It is directly attributed to the development of Northern Ontario, Vescio says.
“We have seen the largest monthly employment increase since June of 1989,” Vescio says.
Specifically “construction employment has increased from 15,400 in May to 17,600 in June in 2002,” Vescio says.
“From year to year there has been a 21 per cent increase in employment construction overall.”
Although Vescio believes the North will never see the surge southern Ontario is experiencing, Northern Ontario is holding its own.
“If we can maintain this level of employment we’ll be doing well,” Vescio says.
One of the few places where housing starts are down is in Sault Ste. Marie. Housing starts fell from 14 in 2001 to 13 in 2002. The marginal decrease has been attributed to the state of the northern economy.
“We don’t have the same economic growth as southern Ontario,” says Bernie Runde, president of the Sault and District Home Builders Association.
“(Southern Ontario is) booming, and the North is growing, but I can see an increase within the next five years.”
The population of the city has decreased from 85,000 to 80,000 due to an inactive economy, Runde says.
He also says a quarter per cent increase in the interest rate may “eliminate a certain amount of the population from buying.”
Lori Moggy, market specialist for the Bank of Montreal, says that although interest rates definitely motivate buyers, a quarter of a percentage point is not enough to stop people from purchasing a house.
Moggy expects to see the prime rate increase two percentage points within the year.
From spring to summer she noticed a rise in not only housing starts, but mortgages in general.
“When interest rates dropped, we noticed a steady increase in people buying houses,” she says.
Presently the bank is experiencing an influx of clients who are looking to build homes in the City of Greater Sudbury.
“People seem to be looking at building versus buying because there seems to be nothing in the price range between $130,000 to $250,000.”
