Tighter lending rules put the squeeze on jobs
Thousands employed in home-building industry feel effect of 2012 policy change
The building, development and professional renovation industry is a major driver of economic growth and prosperity of our region.
Our industry is responsible for creating thousands of jobs across a variety of sectors that help build quality, complete communities and revitalize existing neighbourhoods.
You might be surprised to learn how many people it takes to build a new community. It is estimated that each crane you see across the region represents up to 500 jobs. These include trades people, urban planners, lawyers, engineers, architects, sales people, marketers, builders, land developers and more.
The industry is also one that feels the deep impact of government policy decisions made at every level: local municipalities, the province, and nationallly.
When the federal government introduced stricter mortgage-lending rules in August 2012, it spawned a significant decline in consumer confidence. That, in turn, resulted in drastically reduced sales of new homes and condominiums across the GTA.
The effects lasted throughout 2013, which recorded the second-lowest year of new-home sales in the last decade.
Since one year’s new-home sales translate into many of the next year’s jobs, the effect of that federal policy change was felt by thousands of GTA residents employed by the building and development industry in 2014.
A recent report released by the Canadian Home Builders’ Association (CHBA) revealed that annual job creation in new-home construction fell to 68,000 in 2014 — down by almost 11,000 jobs from the year before.
That is a very significant number, and it is directly related to the amount of new housing starts, which decreased by 5,000 homes across the region.
The renovation industry was also affected by the policy change, losing 11,500 jobs last year compared to 2013. As financing a home renovation became more difficult, more homeowners were forced to turn to the underground economy — contractors willing to perform cash jobs with no written contract to hold them accountable for substandard work.
This practice hurts our region’s hard-working industry professionals who are challenged to compete with these cash-based renovators, as well as the homeowners who have no legal recourse should their renovation go wrong.
As financing home renovations became more difficult, more homeowners were forced to turn to the underground economy
All of this is highly detrimental to our regional economic growth and prosperity. In 2013, the building, development and renovation industry paid $9.7 billion in wages across the GTA. These wages later showed up as purchases across the region, fuelling other industries while contributing a significant amount of tax revenue to our provincial and federal governments. Last year, those wages were reduced to $8.6 billion.
It is important that the health and stability of our industry is considered when introducing new changes to public policy, as it is quite likely to affect the health and stability of our local economy. Bryan Tuckey is president and CEO of the Building Industry and Land Development Association and a land-use planner who has worked for municipal, regional and provincial governments. Follow him at on Twitter @bildgta, facebook.com/bildgta and bildblogs.ca.