Page 6 - Lumber-Building - Reporter Magazine NovDec24

MESSAGE FROM THE PRESIDENT

WHAT DOES 2025 AND

BEYOND HOLD FOR THE

INDUSTRY?

TREVOR SMALL
LBMAO President

s I sit down to write this our industry is in a state of turmoil. For forecast for the coming year and beyond. Peter is a recognized expert
Amost suppliers and retailers in Ontario 2024 has not been a year in land economics and forecasting, and he is frequently featured in
to remember. Our industry has had several hugely successful years Canadian media. He believes that 2025 will be an improvement for
coming out of the pandemic and all those who have been in the most over 2024 in our industry. Interest rate cuts should revive a soft
industry long enough knew that we could not continue without having housing market eventually. Mortgage rates peaked in October 2023
a down year at some point. and that will help homeowners who are facing or have faced huge
The Canadian economy has been very resilient. Even when the US increases in their payments when renewing their mortgages. He
economy struggled in 2008 and 2009, we continued, a bit slower but cautioned that there is only tepid support for the economy. Expect
still growing. Canada has had a strong housing sector for over a decade a 2% growth in GDP with sharply lower employment growth. The
and with the number of new people coming to Canada construction construction labour market is already in tight supply, but it should be
and building trades flourished. Until this year. able to adjust to the modest housing increase in the upcoming year.
The combination of higher interest rates, high land costs, huge Peter predicts the biggest issue in housing for 2025 will be in the
development taxes and fees have all conspired to throw a wrench greater Toronto market. Supply issues in the GTA will have a longer
into an industry that supports many jobs and feeds a lot of families. effect on things. In the GTA new home sales have fallen dramatically
All these factors have combined to make Canadian housing increasing since mid 2022. He forecasts that apartment sales in 2025 will be
unaffordable to the average Canadian. lower than single family homes. That has not happened in a number
The lumber and building materials industry in Ontario functions of years. There will be a shift from rental market to single family. There
due to two large factors, construction of new home as well as the is a need for 40,000 new housing units (single family, multi-family,
renovation of existing homes. Many of the renovations are done when and apartments) but in 2024 only about 10,000 units will be added.
families plan to sell their existing home to make it more attractive to The condo market will be a definite drag on the housing market in the
buyers as well as once they move into to a home those buyers renovate GTA for 2025. The GTA effect will continue to be a drag on the overall
to make the home feature their taste and fit their needs. Canadian market for the next few years.
The sale of newly constructed homes as well as the move-up home
sales market has been challenging in 2024. This has led to slow sales Other Forecasts for 2025 and Beyond
of materials for new construction and renovating. Both dealers and Canada needs 250,000 to 270,000 new unit starts per year for the
suppliers that we have spoken with say that they will be happy to end next decade. This year we are on track for less than 240,000 units. It
2024 with sales results that look like 2019 (pre-Covid) numbers. Are will be an Ontario problem for 2025 and into 2026. Outside the GTA
those the numbers we should be satisfied with matching? in Ontario we will have a solid single family new home construction
market. The prediction is that we will have 10,000 single family
Where do we project numbers 2025? starts in 2025. That number would be substantially higher than we
The fall Hardlines conference had Peter Norman, who is a vice- experienced in 2024.
president and chief economist at the Altus Group, presenting his Renovation spending will continue to adjust since the highs of
Message from the President continued on page 21...

6 LBMAO Reporter - November-December 2024 www.lbmao.on.ca