b'THE STATE OF THE INDUSTRYTHE SLOWDOWNIN CONSTRUCTIONIN ONTARIORESIDENTIAL SECTOR PARTICULARLY HARD HIT By Warren HeeleyONTARIOS CONSTRUCTIONfactor in the residential downturn isThe negative impact of higher interest industry, once booming, is nowhigh interest rates that are impactingrates finally surfaced in about middle facing a significant downturn, accordingpotential home buyers and new 2022 when construction investors and to an online article from the Ontarioproject financing. developers began to delay projects Construction News in late May 2024. Theparticularly those in the private sector, high that construction in Ontario hasAnother aspect causing the residentialsaid Mollenhauer. As an example, in been on for so many years has come todownturn is the hesitancy of developers2023 despite the provincial government an end because of higher interest rates,to move forward with projects becauseannouncing their objective to build economic uncertainty and the increasingof the uncertainty in the housing market1.5 million new homes by 2031, the costs of labour, construction materialsespecially the concerns over projectconstruction industry was already and services over the last few years.profitability. In many cases, residentialstarting to see this project hesitancy developers are putting projects on holdwith developers and by early 2024, the The Bank of Canada is finally startingindefinitely. As a result, residential jobsslowdown had begun in earnest. to reduce interest rates, said TCAare also at risk. The Ontario ResidentialIt should be noted that the slowdown president and CEO John Mollenhauer.Construction Council estimates that thisin construction is part of a general However their strategy is to reduceslowdown could effect more than 40,000slowdown in the Canadian economy them by 25 basis points each quarterresidential construction jobs. that started back in the fall of 2023. which means a reduction of only 75Consumers as well as investors who basis points this year. This not a largeHOW DID WE GET HERE? typically drive the economy, have lost enough change to help this downturnFor the last number of decades,confidence in what is ahead for the reverse direction. construction has been bulletproof tocountry. All this is happening while a downturn with growth continuing eventhe Bank of Canada is slowly reducing Residential construction in bothduring the pandemic. There were issuesinterest rates. In other words, there are the high rise and low rise sectors iswhen COVID first struck about how thetoo many negative economic issues that being particularly hard hit with CMHCindustry would fair within the restrictionsare impeding the confidence needed to indicating the housing starts in urbanmandated by the provincial government.spark economic growth and prosperity.areas of the province were down 37 perHowever, after a few blips, the cent in April 2024 compared to Aprilindustry was considered essential, andThere are simply too many economic 2023. CMHC also noted that this is theconstruction continued to move forwardand social moving parts that impact lowest number of April housing startswith reasonable growth as the pandemicconstruction such as interest rates, in six years. Experts are saying the keyslowly waned. a labour shortage, government 30Quarter 22024 BUILDERSDIGEST'