It’s only a few weeks before the end of 2021. Some analysts believe that this year will be one of the best for new construction dwelling starts since the 1980s.
According to a new Ontario Economic Analysis report authored by Central 1 regional economist Edgard Navarette, new home starts in 2021 are likely to reach around 97,900 units. This would be the biggest number of new jobs since 1987.
In the coming year, Ontario may expect an additional 88,200 housing units, followed by 92,300 dwellings in 2023. In 2021, future residential construction intentions are expected to remain strong, with building permits expected to rise 21.4 percent, while new housing and rehabilitation spending will rise 35 percent and 10%, respectively.
As a result of the pandemic, many families have been compelled to work from home, and demand for home ownership has “skyrocketed” in both the resale and new home markets, according to Navarette. Although most of the focus on new construction has been in metropolitan regions, Navarette remarked that as people leave dense cities, construction activity has increased in rural and smaller urban markets.
The Building Industry and Land Development Association (BILD) revealed yesterday that there were 4,280 new home sales in the Greater Toronto Area in October, which is 7% more than the 10-year average.
“Many households seeing home and work life come under one roof have drawn down savings to renovate their homes or other debt such as lines of credits and credit cards allowing for more space,” said Navarette. “Others eager to cash in on the tight resale homes market have renovated their homes to make them more attractive to potential home buyers.”
Renovation spending is expected to increase by 6.2 percent and 5.9 percent in the final two years of the 2021-2023 Central 1 estimate. As international and interprovincial migration continues to rebound beyond 2021, decreased housing affordability will likely induce homeowners to stay put and instead remodel their homes to age in place or provide rental space.
For much of 2021, supply chain issues hampered the worldwide market and building industry. During the first eight months of 2021, Ontario exports increased by 9.4% over the same period in 2020, but activity has not yet recovered to pre-pandemic levels. In resource-rich locations like British Columbia, persistent supply chain challenges and climate emergencies are preventing export levels from reverting to normal.
“As global trade channels continue to recover, these issues will be transitionary and exports are forecast to increase in 2022 by 7.4 per cent and an additional 3.1 per cent by 2023,” said Navarette.
With the Bank of Canada indicating that interest rates may rise in 2022, Navarette predicts a slowdown in housing demand and renovation investment.