Building permits, October 2020

Municipalities issued building permits worth $8.2 billion in October, down 14.6% from the previous month. September’s peak was the second highest value on record, with October’s results more in line with recent months.

Commercial permits in Ontario fall to earth after record month

The total value of non-residential permits fell 29.5% to $2.5 billion in October, after there were several large permits issued the prior month. Ontario was responsible for over four-fifths of the decline.

Commercial permits set a record decline, falling 40.9% to $1.2 billion in October, the lowest level since November 2011. The value of commercial permits in Ontario fell by 64.4%, following a record set in September due to the high-value permits issued for Project Python in Ottawa and the Breithaupt Block office buildings in Kitchener. Excluding Ontario, commercial permits for the rest of the country were stable compared with the previous month.

Industrial permits were down 19.8% in October to $582 million, with declines posted in every province. Quebec (-$60 million) and Prince Edward Island (-$55 million) recorded the most significant declines, with the latter issuing a permit for a manufacturing plant worth $50 million in the prior month.

Despite a gain of 153.7% or $79 million in Alberta, institutional permits decreased 9.9% nationally to $723 million. Quebec (-31.2%), Ontario (-15.5%) and Newfoundland and Labrador (-99.3%) registered the largest declines. The drop in Newfoundland and Labrador followed a $43 million jump in Corner Brook for a long-term care home permit issued in September.

Residential sector continues to show strength despite October declines

Although the total value of residential permits decreased 5.9% to $5.7 billion in October after a record high in September, the value of residential permits continued to show strength. Excluding Ontario (-9.4%) and British Columbia (-12.0%), the rest of the country reported a slight increase for the month.

Following five consecutive monthly gains throughout the pandemic, permits issued for single-family dwellings declined 2.2% to $2.7 billion in October. Declines were reported in three provinces: Ontario (-8.7%), Newfoundland and Labrador (-8.0%) and New Brunswick (-3.4%). Nova Scotia posted the largest gain (+26.0%) as the city of Halifax cleared up a previous backlog of permits.

Permits issued for multi-family dwellings dropped 9.0% to $3.0 billion, with Ontario (-10.0%) and British Columbia (-18.2%) recording the most significant declines. Conversely, Nova Scotia (+79.5%) reported the largest increase as Halifax also cleared a backlog of permits for multi-family dwellings.

Source: Statistics Canada

World’s Top Lumber Firm Sees Homebuilding Surge Going Strong

Strong homebuilding activity in North America will mean tight wood supply and demand for several more years, according to the top executive of the world’s largest lumber producer. “In the next five years, we see housing starts continuing to be strong and an industry that will be working hard to keep up with demand,” West Fraser Timber Co. Ltd. chief executive officer Ray Ferris said on November 25 in a phone interview.

West Fraser sells about 30% to 40% of its products into the housing industry, according to Ferris, which means his outlook bodes well for the Vancouver-based firm. Demand and prices for lumber and other wood materials soared during the pandemic on a surge in renovations and home construction, benefiting producers. West Fraser deepened its commitment to the industry last week with a $4-billion (Canadian) offer to acquire Norbord Inc., the world’s largest producer of a plywood stand-in known as oriented strand board.

West Fraser has expanded through acquisitions during the past 65 years and Ferris said the Norbord deal will further diversify the company, providing more of a hedge on trade, currency, product line and geography. Norbord has 17 operations in the U.S., Europe and Canada, according to its website. West Fraser has 45 facilities in the western Canadian provinces of British Columbia, Alberta and the Southern U.S., its website said.

West Fraser manufactured 5.9 billion board feet of lumber in U.S. and Canadian mills last year, according to the company. Roughly 60% of its lumber sales are in the U.S., with 20% in Canada, 16% in China and the rest in Japan and other markets. “We believe we’re going to be able to build at a higher level and build a capacity to take on future growth,” Ferris said, adding that though no other takeovers are looming “every day we’re looking for things that make the company stronger and better.”

One adjustment already has been to shift production to Alberta and the U.S. after mountain pine beetle infestations damaged forests in West Fraser’s home province. About three-quarters of the company’s production now takes place in Alberta and the U.S. South, according to Ferris. “Our focus has shifted heavily to the U.S. South,” Ferris said. “We see continued ability to modernize and grow for several years to come.”

Source: Toronto Star

GTA New-Construction Single-Family Home Sales Continue to Soar in October as Condo Sales Plunge

New-construction home prices and sales of new single-family homes in the GTA continued to climb year over year in the double digits in October, as consumers search for more space to physically distance and work from home during COVID-19. But the number of condo sales plunged 32% year over year in October, said the Building Industry and Land Development Association (BILD) on November 26.

The benchmark asking price for a condo rose 18.8% annually this October to $990,880, but sales were 32% below last October and 20% under the 10-year average. The benchmark asking price for new single-family homes — including detached, semi-detached and town homes — was $1.21 million, up 12.7% over last year. The 1,914 single-family homes that sold last month, a 44% annual rise, landed 42% above the 10-year average.

While overall sales continue to be strong, the pandemic has delayed some building approvals and slowed immigration, a key driver of housing demand in the Toronto area, said BILD CEO David Wilkes. “We are seeing some pandemic-specific impacts that are causing sales to be off a little bit in certain areas, but as we evolve out of the pandemic those factors are also going to dissipate, in particular immigration. Longer term the situation is still very bullish,” he said.

A number of condo projects launched in October, but the 2,340 units that sold may be a reflection of how those transactions are occurring under COVID-19 restrictions, said Ryan Wyse, manager of analytics and data solutions for Altus Group, which tracks new home sales and prices. “Virtual tours and signings and by-appointment sales offices have allowed the market to continue operating during the pandemic. However, sales launches have changed — instead of crowds at opening, we are seeing a shift to appointments over a longer period of time,” he said.

The industry expects sales of new launches to take longer under the current conditions, Wyse said. Sales on some higher-priced condo offerings late in September didn’t register until October, accounting for some of the increase in the benchmark price, he said. This year to date there have been 14,000 single-family home sales, an 80% increase over the first 10 months of 2019 and 19% above the 10-year average.

Source: Toronto Star