Housing Market-Residential construction big driver in economic growth, latest report shows
The Canadian residential construction industry continues to be a major driver of the national economy according to the latest annual report from the Canadian Home Builders’ Association.The association’s 2015 Economic Impacts of Residential Construction study found that new construction, renovation and repair accounted for more than 1 million jobs last year, making the industry one of the country’s largest employers. In the same year, the so-called “investment value” of new home construction, renovation and repair – a value that accounts for all expenditures except land — exceeded $128 billion, based on Statistics Canada Building Permits data.The report highlights that housing is still doing well, while the rest of the economy isn’t, says CHBA CEO Kevin Lee. It also shows “the sheer size of the industry, and that it operates in every community from coast to coast.” That industry largely comprises small and medium-sized enterprises that create jobs “and really drive the economy,” he says.
Continuing the trend of the past decade, renovations outstripped new home construction both nationally and here in Ottawa last year. Countrywide, renovation and repair accounted for 54.4 per cent or $70 billion in investment value compared to 45.6 per cent or $58.7 billion for new construction. In Ottawa, renovation and repair weighed in at 52.6 per cent or $2 billion while new construction amounted to 47.4 per cent or $1.7 billion.Lee says booming renos and repairs are a result of Canada’s ever-larger housing stock, which inevitably ages and requires upkeep and “beautifying.” He expects renos and repairs to lead the industry charge “indefinitely” as our housing stock continues to grow.
The economic reach of the housing industry extends beyond just figures like the $58 billion-plus in wages nationally reported for last year. Other benefits range from tax revenues and spending at local businesses to large donations from builders to hospitals and other local institutions, which Lee says is “probably an under-recognized thing, the amount the industry gives back to the community.”
Still, the CHBA’s latest report isn’t necessarily a good news story locally according to John Herbert, executive director of the Greater Ottawa Home Builders’ Association.For example, new home construction starts are down about 25 per cent over the past four years, Herbert says, and he doesn’t expect that to change much next year. The slow down, he says, has a “significant impact on jobs and tax (revenues).”
In Ottawa, housing jobs last year amounted to more than 20,000, slightly more than half of them in renovation and repair. That ratio is close to that of the province as a whole, where there were 174,873 jobs in renovations and repairs last year compared to 156,758 in new construction.While Lee says the latest CHBA numbers show housing as a welcome source of stability in a national economy that’s “sputtering” in some sectors, he points out that a vibrant market overall can also mean a continuing uptick in housing prices. That’s making it increasingly difficult for young buyers to get into the market, a fact that has long-term ramifications in an industry that counts on new and move-up buyers to help keep it thriving. http://ottawacitizen.com/life/homes/residential-construction-big-driver-in-economic-growth-latest-report-shows
The Spectator’s View: Tackling Hamilton’s economic development
“Huge shoes to fill” is how Hamilton general manager of planning and development Jason Thorne referred to the pending retirement of Neil Everson, the city’s director of economic development. For a host of reasons, some obvious, some not, that bears repeating.
When he bids farewell, the veteran of 16 years will leave a department and a city on a roll. Hamilton is not on the cusp of renaissance, it’s in the thick of it, and Everson and his team deserve credit for being catalysts, although they’re hardly the only ones. Locally, regionally and even internationally, the department is held in high regard. It has helped recruit major economic players such as Canada Bread, Navistar and Maple Leaf Foods. It has worked hard to help existing local businesses expand and remain viable. Everson and his staff get some of the credit for the Conference Board of Canada ranking Hamilton’s economy as among the most diverse in the country.
But, and there’s always a but, what’s next? While Everson and his team have done a laudable job of getting the city’s economic development on track and sustainable, the challenge going forward is that and much more. Home runs like the ones noted earlier are very valuable because they represent sizable growth in the city’s commercial industrial tax base. But that sort of single injection is few and far between. Everson likes to say he appreciates those home runs, but also sees the value of “singles and doubles” — the economic boosts provided by small and medium sized businesses.
The problem is it takes a lot more small and medium-sized boosts to match the dollar value of one home run. So, how does Hamilton not only sustain but also grow its non-residential tax base? Consider some blunt economic realities.
While economic indicators are positive, Hamilton’s overall tax base is still skewed with the result that the lion’s share of the tax burden falls on residential taxpayers. There is strong growth in that sector, but ultimately we need some rebalancing so the pie is more balanced between residential and industrial/commercial. That used to be the case, but with the loss of successive large rate payers (U.S. Steel being the latest) that imbalance has become the norm. Hamilton is not unique in this regard — the same is true of most post-industrial Ontario cities, but the situation here is acute.Another challenge? Much investment in non-residential development is by public institutions. The investment and new jobs are welcome, but public institutions — hospitals, universities, colleges and the like — don’t pay taxes, they pay the city through a “heads and beds” fee that isn’t nearly as robust as taxes would be. Bottom line: Hamilton continues to face a huge revenue challenge and economic development must be a big part of the answer. Big shoes, big job.
Greenbelt Freeze urban boundaries for two years, says Greenbelt groupFriends of the Greenbelt Foundation says population projections should be updated before sprawl expands.
By TESS KALINOWSKI
An environmental charity dedicated to protecting the Greenbelt around Toronto is recommending the province freeze the development boundaries of regional municipalities for two years.That’s how long it will take to update population growth projections using this year’s census and develop new guidelines around the way communities assess the amount of land they need to accommodate that growth.The proposal from Friends of the Greenbelt Foundation will likely to draw fire from builders who say the provincial growth plan is already constraining land use, limiting the supply of new housing and driving up the price of homes in the Toronto region.But the Greenbelt advocates say the current method of assessing land needs is “fatally flawed.” It supports a government-appointed panel headed by former Toronto mayor David Crombie that recommends denser development. The environmental group is issuing its report Wednesday suggesting how those recommendations can be strengthened when the province updates its Smart Growth plan.
Pausing the expansion of municipal borders is a reasonable proposition given that the province is already projecting lower population growth than it was four years ago, said Kevin Eby, a former Waterloo Region director of planning, who wrote the report for Friends of the Greenbelt Foundation.”We’re not saying that there shall never be expansions again or municipalities have to create hard boundaries,” he said.But, said Eby, “There’s enough of a question now about the population forecasts that we shouldn’t be bringing any more land in until the 2016 census is released.”Friends of the Greenbelt Foundation want Queen’s Park to clarify the deadline for achieving higher densities.The method of assessing how much land is needed for development also must be standardized, says the group.
Many planners have looked at past housing trends to predict future needs. If patterns show there will be a desire for low density detached houses, the municipality then expands its boundaries to provide space for those homes, even though it may already have the capacity for higher density townhomes or apartments.”They’re just projecting the same building forward so you’re getting a double whammy of poor planning. On one hand you’re over-projecting how much land you need and then you’re projecting on historical evidence that we clearly know is changing. What we build now is completely different than what we built 10 years ago,” said Friends of the Greenbelt Foundation CEO Burkhard Mausberg.Protecting the Greenbelt means preserving a million acres of prime agricultural land that produces everything from strawberries and wine grapes to cattle, he said.”If the growth plan doesn’t work, what we will find 20, 30 years from now is that inefficient sprawl will have come to the boundary of the Greenbelt and put pressure on the Greenbelt to have that land reduced in size,” he said.
Although Ontario’s Smart Growth plan is 10 years old, it hasn’t influenced development around Toronto yet. Those plans were already in place when the legislation took effect, said Eby.”The next 10 years is where you’re going to see the impact of the growth plan,” he said.
The province has extended the period to comment on its Co-ordinated Land Use Planning Review review until Oct. 31.https://www.thestar.com/business/2016/08/17/freeze-urban-boundaries-for-two-years-says-greenbelt-group.html
The Toronto region is in the midst of what politicians are billing as a ‘transit renaissance.’By Ben Spurr
The Toronto region is in the midst of what politicians are billing as a “transit renaissance,” which will see a major build of badly needed public transportation across the GTHA for the first time in decades.But according to a new report, unless governments find more funding to pay for those planned lines, the money will run out before the renaissance is even halfway completed.The report is to be released Tuesday by Move the GTHA, a group of organizations that advocates for transit improvements. Its goal was to quantify the investment still required to complete the ambitious network expansion the province announced eight years ago. The authors found that less than half the planned network has been allocated funding.
Entitled Are We There Yet?, the report was shared with the Star ahead of its release. It calculates that, taking into account the province’s 25-year Big Move plan announced in 2008 as well as the regional express initiative (RER) announced more recently, the total length of the Greater Toronto and Hamilton Area’s rapid transit network would be 1395 kilometres by 2033.Of that, the report calculated that 61 kilometres was in place in 2008 and isn’t slated for upgrades and 52 kilometres have been built since that time. (The figure for existing lines doesn’t include the GO network because much of is it slated for substantial service improvements.)
A further 519 kilometres of new or improved transit is funded but not yet completed, and more than half of the total network, or 763 kilometres, is wholly unfunded.“There’s some good news in this story. The different levels of government have committed quite a large chunk of capital money. The bad news is though, we still need another roughly equal amount of capital money,” said Peter Miasek, a spokesperson for Move the GTHA and president of Transport Action Ontario.The report determined that of the $68.1 billion cost to build the Big Move and RER, governments have committed more than half, or $39.3 billion. The bulk of that sum, $30.9 billion, has come from Queen’s Park. That leaves $28.8 billion that federal, provincial and municipal governments need to find over the next decade and a half to complete the network by 2033.The report lists as unfunded projects the relief line subway, extending the Eglinton Crosstown to Pearson Airport, GO Regional Rail service to places such as Bolton and Seaton, Dundas St. bus rapid transit and pushing the Yonge subway north to Richmond Hill.
A task the report calls “equally challenging” to finding money to build transit is raising the funds to operate the expanded network once it’s constructed. The authors estimated that by 2032, the non-capital costs of maintaining the expanded system would reach $3.8 billion a year.
Robert Plitt, a Move the GTHA spokesman and acting director of Evergreen CityWorks, stressed that governments have made “tremendous progress” in transit investment since the launch of the Big Move, which includes such projects as the Eglinton Crosstown, Union Pearson Express, the Mississauga Transitway and York Region bus rapid transit.
But with the federal government promising to invest $120 billion over 10 years in transit and other infrastructure and provincial transit agency Metrolinx in the midst of a review of the Big Move, Move the GTHA timed the release of the report to start a conversation about how to make up the funding shortfall.
“We’re at a moment where it’s possible for us to actually finish the job that we started,” Plitt said.
The group is calling for all three levels of government to hold a “transit summit” as soon as possible to develop a funding strategy.
The report suggested several options for new revenue tools that could be used to pay for transit, including HST and gas tax rate increases, as well as a new parking space levy and a road pricing scheme, but the group didn’t endorse any specific tool.
Asked how the province intends to fund the rest of the planned network, Bob Nichols, a spokesman for the ministry of transportation, didn’t answer directly. Nichols wrote in an email Monday the government is reviewing the Move the GTHA report.
Nichols stated that the GTHA is experiencing “unprecedented” transit growth, and the Liberal government’s Moving Ontario Forward plan includes major investments over the next decade including $13.5 billion for GO RER, $1.4 billion for Hurontario LRT in Mississauga. In total $32 billion in transit projects is already underway, Nichols said.“These investments will help to manage congestion, connect people to jobs and improve the economy and residents’ quality of life. The province will continue to work with its federal and municipal government partners to support these transformational transit investments,” he wrote.The report didn’t break down the $28.8-billion shortfall by municipality, so the value of the unfunded projects that would serve Toronto is unclear. This fall, Toronto city council is expected to debate new revenue tools to pay for its share of the transit network as well as other city priorities.In an email to the Star on Monday, a spokeswoman for Mayor John Tory’s office said he intends to endorse revenue tools when the issue goes before council, with the hope that councillors will approve new revenue sources before the end of the year.
Regional transit plans for the GTHA
By the numbers
Size of rapid transit network planned for 2033
Estimated capital cost of new and upgraded transit
Amount pledged by federal, provincial, and municipal governments so far
Average time spent commuting today
Average time spent commuting in 2033 if the Big Move is completed
Average time spent commuting in 2033 if transit network isn’t expanded significantly
Projected population of GTHA in 2033
New Home BuyersGet Used To Renting, CIBC Tells TorontoniansBy Daniel Tencer
An overwhelming majority of Toronto’s residents — including millennials — want to own a single-family home, according to a new study from Ryerson University.For many those dreams will be dashed on the rocky shores of rising house prices, which the Ryerson study and a new CIBC report blame partly on provincial densification policies that have reduced single-family home construction to a fraction of its former self.And not only should Torontonians stop dreaming of single-family home ownership (that is, other than those who already own a home), some should even stop dreaming of owning anything at all, the CIBC report says.As Toronto becomes a larger, denser and more expensive city, a larger share of the population will have to rent their housing. The CIBC report suggests that increasingly unrealistic expectations of homeownership are part of what’s driving up house prices in Toronto.
“The GTA is in a twilight zone of home prices characterized by a homeownership mentality that is slow to change to the required higher propensity to rent,” economists Benjamin Tal and Katherine Judge wrote.It’s not just Toronto. Many “globalized” cities around the world have seen substantial jumps in housing prices in recent years, and there, too, experts say more people will have to get used to renting.A recent study looking at London predicted the U.K. capital’s home ownership rate will drop to 40 per cent by 2025, from 60 per cent in 2000. (Toronto’s home ownership rate came in at 68 per cent in the 2011 National Household Survey.)But the Ryerson study, which collected data from a number of earlier surveys, found that Greater Toronto Area residents continue to be as ambitious as ever in their homeownership goals. Only 18 per cent in the GTA prefer apartment housing to ground-level housing.Millennials — who are doing most of the first-home buying — are more likely to prefer apartments, but only slightly, with three-quarters saying they want ground-level housing.Meanwhile, two-thirds of the housing starts in Greater Toronto these days are apartments or condos.“The view that many households in the GTA would willingly give up single-detached houses to move into higher density housing in location-efficient communities is wrong,” the Ryerson study concluded.
A ‘huge windfall’ for those who already own land
The report warns that Ontario’s densification policies will reduce the quality of life and, in effect, cause a transfer of wealth to existing landowners, from non-landowners.
“Urban policies which try to force [densification] by constraining the supply of new ground-related housing will lead to even higher house prices, sub-optimal location choices, and huge capital gain windfalls for the lucky owners of existing houses and vacant lands….”
Like the Ryerson study, the CIBC analysis also points the finger at restrictive land use policies as being part of what’s driving up house prices.
“Policies such as the ‘Places to Grow Act’ have limited the availability of serviced land for ground-oriented houses through setting aggressive intensification and density targets,” the CIBC report wrote.
The study says Ontario should “reassess” its plan, unveiled earlier this year, to set even higher densification requirements for the southern Ontario area.
Fighting urban sprawl
But environmental advocates are defending densification targets, as well as the Greenbelt the province put around the GTA to limit urban sprawl.
“Some in the development industry want to keep building sprawling low-density housing. It’s this cookie cutter approach to land use that has caused Ontario’s mess of traffic congestion, hefty residential taxes, and degraded natural environment,” Erin Shapero, the Greenbelt and smart growth program manager for Environmental Defence, told HuffPost Canada in an email.
“It’s time the sprawl developers stop trying to turn back the clock to a 1950s model of growth, where low-density sprawl destroys farms, makes residents car-dependent and creates debts for municipalities struggling to provide services like water and transit to these far-flung subdivisions.”Shapero pointed to a recent study from the Neptis Foundation, which found that enough developable land exists in the GTA “to last to 2031 and likely beyond.”http://www.huffingtonpost.ca/2016/08/16/get-used-to-renting-toronto_n_11551254.html