The Mayor’s State
of the City Address last evening highlighted housing construction in
Thunder Bay particularly touting that Thunder Bay within Ontario had met its
target so far and ranking tenth amongst Ontario centers (See here
for a ranking). The Mayor reiterated
once again that in response to coming economic development and demand, Thunder
Bay needed more housing and has a target of 1,691 new homes over three years. Naturally, the question that arises is
whether or not Thunder Bay can indeed meet this target. Much depends on the ability
of the local construction sector to actually build that many homes in three
years as well as whether the demand will materialize.
Forecasting the future these days is a pretty perilous exercise
but some insight on the ability of Thunder Bay to build what amounts to nearly
600 new homes a year can be garnered from past performance. Figure 1 plots monthly Statistics Canada total
residential permit data by dollar value and number of permits from 2011 to 2023. The numbers fluctuate seasonally though there
is a spike in 2023. However, there are similar spikes in earlier periods. If you want to smooth things out by taking a average - Thunder
Bay has averaged monthly over the 2011 to 2023 period approximately 25 residential permits with
an average value of 6.5 million dollars. Converted annually, that 25 permits a month translates into 300 units - a bit short.
Perhaps rather than permits issued, a better indicator of
Thunder Bay’s capacity and ability to build nearly 600 units annually is a
longer-term total housing starts series. Figure 2 plots this from January 1990 to January
2024 and includes a polynomial smooth to highlight trends. The results suggest that Thunder Bay is
indeed capable of building 600 units a year as we have done so in the past. Indeed, the early 1990s resulting in over 1,000 new housing starts annually. However, the major obstacle is likely to be
not building capacity or ability but demand for new units. As the smoothed series points point, we are
on an uptick that can see about 400 new homes being built in the next
year. Reaching 600 is possible based on the
recent past given the smoothed numbers going into the pandemic. However, as noted, the result is going to be
driven also by our economic growth. Thunder
Bay has been doing well economically over the last year but will require
sustained performance at this level to generate the needed demand for housing.
