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.
