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Home My WebLink AboutPSD-066-06 REPORT PLANNING SERVICES Meeting: GENERAL PURPOSE AND ADMINISTRATION COMMITTEE Date: Monday, June 5, 2006 Report #:File #: y-law #: PSD-066-06 PLN 9.4 B Subject: 2005 GROWTH TRENDS REVIEW RECOMMENDATIONS: It is respectfully recommended that the General Purpose and Administration Committee recommend to Council the following: 1. THAT Report PSD-066-06 be received for information. Submitted by: Reviewed by: David J. Crome, M.C.I.P., R.P.P. Franklin Wu, Director of Planning Services Chief Administrative Officer GF/FL/jd/df 30 May 2006 CORPORATION OF THE MUNICIPALITY OF CLARINGTON 40 TEMPERANCE STREET, BOWMANVILLE, ONTARIO L1C 3A6 T (905)623-3379 F (905)623-0830 REPORT NO.: PSD-066-06 PAGE 2 1.0 PURPOSE This report summarizes the key findings of the 2005 Growth Trends Review. 2.0 BACKGROUND 2.1 The Planning Services Department conducts on-going monitoring activities to assess the effectiveness of the Municipality of Clarington’s Official Plan, as well as other municipal and Region of Durham policies. These monitoring activities also assist in identifying emerging issues and trends within the Municipality of Clarington. Building permit activity, population growth and other such related data are often used as an indicator of housing and employment activity within Clarington, level of local investment, and economic performance; this and other information has been compiled into a Growth Trends Review, a new report which will be updated annually. 2.2 The data collected and analyzed in the Review are based on building permit and related housing market information that is collected from a variety of difference sources. These sources include: Municipality of Clarington’s own-source data, ? Durham Region, ? Statistics Canada, ? Canada Mortgage and Housing Corporation, ? Royal Bank of Canada’s Econoscope, ? The Bank of Canada, and ? Toronto Real Estate Board’s Market Watch. ? 3.0 KEY FINDINGS OF THE 2005 GROWTH TRENDS REVIEW 3.1 The 2005 Growth Trends Review (Attachment 1) examines Clarington’s growth activity and compares its performance against other area municipalities within Durham Region. In addition, the Review examines past, current and forecasted housing market activity and provides a short-term outlook on future development activity for Clarington and Durham Region. 3.2 Growth Activity in Clarington The total value of all building permits issued in Clarington decreased by -4.97% from $213.85 million in 2004 to $203.22 million in 2005. Despite this decrease, the Municipality still observed its second highest year ever in terms of the total value of building permits issued, next only to the record-setting previous year of 2004. The decrease in total building permit value for Clarington can be attributed to a drop in the overall residential building permit value from $167.31 million in 2004 to $141.85 million in 2005. However, this was balanced by an increase of 31.88% in the total non- residential building permit value from $46.53 million in 2004 to $61.37 million in 2005. REPORT NO.: PSD-066-06 PAGE 3 3.3 Growth Activity in Durham Region Durham Region experienced an overall increase of 19.88% in total building permit value from $1.30 billion in 2004 to $1.56 billion in 2005. The $1.56 billion in 2005 was the second highest total building permit value in the Region’s history, second only to $1.70 billion in 2003. Since 2000, the total value of building permits issued in Durham Region has averaged about $1.27 billion. The growth in total building permit value in 2005 was primarily attributed to significant investment in the residential sector ($1.11 billion in 2005 compared to $865.80 million in 2004). In contrast, the non-residential sector experienced only a small increase to $446.50 million in 2005 from $438.70 million in the previous year of 2004. 3.4 Clarington’s Share of Growth Activity within Durham Region In 2005, Clarington’s share of the total building permit value in Durham Region experienced a decrease from 16.39% in 2004 to 13.17% in 2005 (representing a -3.22% change from 2004 to 2005). This change can be attributed to stronger than normal total building permit activity in several larger municipalities within Durham, such as Ajax with an 8.85% gain in the overall share. Oshawa (2.17%) and Whitby (1.39%) also made small gains in their share of the total building permit value, while Pickering lost 7.63% of the total building permit value share in Durham. In Durham Region as a whole, building permits were issued for a total of 5,783 new residential units, up from 4,911 in the previous year of 2004. Clarington’s share of the total number of new residential units in 2005 was 13.88% (802 new residential units), a decrease from the previous year’s share of 20.67% (1,015 new residential units) in 2004. Despite maintaining a strong absolute number of new residential units being produced in 2005, stronger years in terms of net residential unit production from both Ajax (1,939 new residential units) and Whitby (1,531 new residential units) contributed to a smaller share for Clarington within the context of Durham Region. The strong year in non-residential building permit value for 2005 increased Clarington’s share of the total non-residential building permit value within Durham Region from 10.55% in 2004 to 14.51% in 2005. Ajax (up 9.40% from 2004) and Whitby (up 3.97% from 2004) were the only other two area municipalities within Durham Region that increased their share of the total non-residential building permit value. 3.5 Housing Market Indicators Despite an upward trend in October of 2005, the average three and five-year mortgage rates were lower in 2005 (5.6% and 6.0% respectively) in comparison to 2004 (5.7% and 6.2% respectively). The one-year average mortgage rate increased from 4.6% in 2004 to 5.1% in 2005. CMHC has reported that interest rates are expected to rise by a moderate amount in 2006 by up to half a percentage point. The average price of a completed and absorbed single-detached dwelling in the Oshawa CMA was $294,535 in 2005, representing an increase of 11.1% from $264,979 REPORT NO.: PSD-066-06 PAGE 4 in 2004. In particular, the average price of a newly constructed single-detached dwelling in Clarington increased by 10.3% from approximately $237,000 in 2004 to $261,800 in 2005. Despite these increases in price, CMHC states that homebuyers still favour the Oshawa CMA for its relatively affordable house prices compared to that of Toronto and other GTA area municipalities. 3.6 Short-Term Outlook For 2006, CMHC is forecasting that housing starts will decrease in both the Oshawa CMA (-9.6%) and the Toronto CMA (-4.0%). The forecast for Ontario is similar with a -6.6% decline predicted for 2006. RBC Financial Group as a result has stated that, “… while we expect the pace of new home construction activity to remain strong in 2006, housing is past its peak as a driver of economic growth.” In a recent report, CMHC reported that, “Although lower [home starts], new home construction in the Oshawa CMA is still above the long-term historical average [and]… Low borrowing rates will ensure demand for housing will stay at respectable levels.” This suggests that the residential building permit activity in Durham Region and its area municipalities will remain healthy throughout 2006, despite the forecasted decreases for Ontario. A strong year for non-residential building permit activity in Clarington has helped offset the decrease experienced in the residential building permit value. In 2006, Clarington expects to see continued increases in the non-residential building permit value due to upcoming non-residential building projects. Durham Region also experienced positive growth in non-residential building permit activity in 2005. The value of non-residential building permits in 2005 at $447 million was the second highest level achieved in Durham’s history (after 2003 - $650 million). At the provincial level, Statistics Canada reported the value of non-residential building permits increased by 5.3% to $9.20 billion in 2005. The national level also experienced an increase in non-residential building permits value by 17.6% in 2005 to reach the $22.20 billion mark. With minor growth forecasted for non-residential building permit activity in the next year at the national level, it is expected that both Clarington and Durham Region will remain stable over the course of 2006. 3.7 Short-Term Population & Household Forecasts Durham Region’s short-term population forecast reported Clarington’s population in December of 2005 at 82,010. The Region’s population for the same time period was estimated at 585,290 translating to a 14.01% share for Clarington of the total Region population. Similarly, in December of 2005 there were an estimated 26,775 households in Clarington. The reported total for the Region was 194,585 households, resulting in a 13.76% share for Clarington in terms of the Region’s total number of households. The short-term forecasts indicate that Durham’s population is expected to reach 601,500 by the end of 2006, approximately 612,000 by the end of 2007 and approximately 641,000 by the end of 2010. This represents a growth rate of 1.7% annually. For the same period, Clarington’s population is expected to grow to 84,500 by REPORT NO.: PSD-066-06 PAGE 5 the end of 2006 (14.04% share of Region total), approximately 86,500 by the end of 2007 (14.13% share) and reach 91,900 by the end of 2010 (14.34% share). Similarly, Durham’s households are expected to reach approximately 200,000 by the end of 2006, 205,000 by the end of 2007 and 222,000 by the end of 2010. The number of households in Clarington is expected to grow to 27,580 by the end of 2006 (13.79% share of Region total), to approximately 28,480 by the end of 2007 (13.89% share) and reach 31,280 by 2010 (14.09% share). Attachments: Attachment 1 - 2005 Growth Trends Review