Another record-breaking year for home construction is forecast for London and area.
Fresh off a year of residential construction that was the hottest in 10 years, 2021 is ramping up in its first four months to smash that total, said Jared Zaifman, chief executive of the London Home Builders’ Association.
There were 1,899 housing starts from January to the end of April, up from 1,145 in the previous year over the same period, a 66 per cent increase. During part of those months last year, construction was slowed as builders worked on compliance with COVID-19 restrictions, but residential construction was not stopped.
“It all starts with demand. It’s unbelievable right now. It’s not slowing down,” Zaifman said. “We’re starting to see consistent demand, and we can bring more online. We’re looking at a record year.”
In 2020 there were 4,262 housing starts, the highest single-year figure in the last 10 years. The building spike was due mostly to growth in the single-detached and apartment segments with 790 starts, outpacing the 10-year average of 370, he added.
Last month alone, builders broke ground on 755 homes, and 277 of those are single-detached homes, the highest ever for the month of April.
City hall building officials also see the increased demand for new homes. While the LHBA figures are recorded when construction begins, the city counts its total when permits are issued, and to date this year it has issued 427 permits compared to 197 in the first four months of 2020, said Peter Kokkoros, chief building official with city hall.
“It’s positive when we’re busy and we are very, very busy. What happened last year is carrying over. I don’t see it slowing,” said Kokkoros.
The building demand has, however, created a challenge in the construction sector with a shortage of some building materials such as windows, insulation, bathtubs, garage doors and lumber, he said.
“It’s a challenging time for home builders. They’re trying to do as much as they can, they’re trying to get creative,” said Kokkoros.
New home building is not the only sector that has seen increased demand. City hall is also issuing more permits for renovations and “alterations’ to homes. In 2020, from January to April it issued 360 and this year to date it has already approved 533 permits.
Even permits for pool fences are up, with 161 approved this year, compared to 41 over the same period last year, Kokkoros added.
As the supply of new homes increases, Zaifman is hoping demand will be met and the price of new homes may cool. The average home in London now sells for more than $600,000, doubling over the last five years, as demand has outstripped supply.
“Supply is a way to deal with affordability. It’s a concern from our perspective. We want people to own a home, to achieve the dream of home ownership,” Zaifman said.
But there is always the risk a levelling-off of home prices in the city and region will draw even more Toronto-area buyers here, offsetting any benefit from increased supply, said Abe Oudshoorn, a housing advocate in London.
“We’re not an island and if there is any softening in our market we will still see a lot of people from the Toronto market. The best we can hope for with more supply is to stabilize (prices),” he said.
As welcome as new supply is, he also advocates for a “housing mix” with more units dedicated to affordable spaces.
“We need more supply if we want everyone to have a home, but we need a mix of affordability in that,” Oudshoorn said.