The slowing housing market looks to have spread to the Elmira area – but that is no reason to panic, say officials.
Municipal statistics show that while the housing boom has significantly waned, it hasn’t gone bust.
After a period of some five years where the housing market in the Woolwich area soared, these days fewer building permits are being issued: the number of permits issued in January and February of this year (50) is down significantly from the same period last year (63). Across the country, the real estate market began cooling off in the second half of 2008 and experts strongly suggest that the trend will continue over, at least, the next six months as a recession runs its course through 2009 and starts to stabilize towards 2010.
But what is clear is that the housing fiasco south of the border will not spill over into Canada.
“There is some weakening but it’s still nowhere near the U.S. situation, not even approximately,” explained Larry Smith, an economics professor at the University of Waterloo. The chance of that happening in Canada is slim given the present circumstances here, said Smith, primarily the difference between the number of risky mortgages doled out in the U.S. and north of the border.
“To see acute widespread distress – it is not present in the marketplace, and it’s hard to see the circumstances that would create that. Now, there could be some further weakening as the recession takes hold.”
While the recession will no doubt lead to a weakening of the local housing market as people exercise more caution, and wait to buy or renovate, the current slowdown is just that, even in Woolwich.
“I think everybody’s just going to wait and see what’s going to happen with the economy; people seem to be hanging on to their money a little bit more this year,” said Woolwich’s chief building official, Peter VanderBeek.
The same is apparent in Wellesley, where permit applications are down about 40 per cent over what they were two years ago and new house permits are down about 60 per cent, said VanderBeek’s Wellesley counterpart, Rik Louwagie.
That said, building permits related to the industrial and especially agricultural sectors will buoy the townships as they deal with a slowdown in the residential housing market.
“I think the fact that we have such a strong Mennonite population really helps our economy here, because they’re not nearly affected the same way by the automotive sector and such as some of the other taxpayers are. That part of the construction always keeps going. They’ve always got some projects on the go, so, that’s where we may be showing a little stronger than some of the urban centres,” said Louwagie.
In Woolwich the number of commercial projects on tap for 2009 is also telling. Whereas construction values in 2008 reached $5,704,000 at the end of February, this year, the dollar value for the same time frame has climbed to $7,898, 200.
The cause of this, says VanderBeek, is the type of construction projects on the books for this year.
“For dollar value construction value we’re actually up a couple million dollars,” he said.
“The number of permits doesn’t really accurately affect the amount of work that has to be done for every permit: you could have 10 permits for decks and you’re out in a few minutes, but you’ve got a couple big projects that we’re reviewing now.”
Among the big-ticket items in line for next year are: the construction of a new public school in Floradale (the school board expects to go to tender soon); a Canadian Tire store on Arthur Street; and a Holiday Inn hotel at the Farmer’s Market in St. Jacobs.
In light of hard economic times rife with media hype, Smith underscored the importance of focusing on local realities.
“There’s too many people who figure incorrectly that what happens in America first happens in Canada later to greater degree – if America gets a cold we get a pneumonia – but truth is it’s the other way around. The last thing we need is Canadians unnecessarily anxious or making unwise decisions,” he said, noting that “the gloomsters are out in full shriek” much like they were during other economic recessions like that of the early ‘80s.