Flat Employment and Real Estate Market Impact Housing Starts

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Business in Thunder Bay

THUNDER BAY – BUSINESS – For the fifth consecutive month, housing starts are down in Thunder Bay. “The trend’s downward movement in April marks the fifth month that the trend has moved down after a solid run-up that had begun in April of 2015. The decline can be attributed primarily to weaker multiple-unit housing starts, which include semi-detached homes, townhouses and apartments. Flat employment and a resale market moving into balance caused starts to slow in the last few months,” concluded Warren Philp, CMHC Market Analyst for the Thunder Bay CMA.

Significant Downward Trend in Real Estate

Housing starts in Thunder Bay Census Metropolitan Area (CMA) were trending at 150 units in April, down from 200 units in March according to Canada Mortgage and Housing Corporation (CMHC). The trend is a six month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts.

Ontario Wide Starts Down Slightly

Housing starts in the Ontario region were trending at 70,135 units in April, down from 71,889 units in March, according to Canada Mortgage and Housing Corporation (CMHC). The trend is a six month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts.

“The Ontario residential construction trend moved lower in April and remains below its peak in January of 2016. The decline in April was due solely to the apartment sector where starts moved to a more sustainable longer term level. Overall activity masks underlying strength in recent months for low-rise construction. Demand for single detached homes is supported by low mortgage rates, an undersupplied low-rise resale market and improving income growth. Meanwhile, households unable to afford a single detached home are opting for other ground oriented options such as row housing”, said Ted Tsiakopoulos, CMHC’s Ontario Regional Economist.

CMHC uses the trend measure as a complement to the monthly SAAR of housing starts to account for considerable swings in monthly estimates and obtain a more complete picture of the state of the housing market. In some situations, analysing only SAAR data can be misleading in some markets, as they are largely driven by the multiples segment of the markets which can be quite variable from one month to the next.

The standalone monthly SAAR was 4 units in April down from 18 units in March due to weak single-detached and multiple-unit housing starts.