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Greater Niagara Chamber of Commerce

St. Catharines and the housing boom – what’s the real story?

The Huffington Post recently reported that St. Catharines was the worst city in Canada for jobs and homes, combining a lack of jobs with soaring house prices. Is that true? Read on to find out.

HuffPo reports that the St. Catharines jobless rate is 8% this year, and was 6% last year, implying that unemployment is rising. That’s not actually true. Unemployment was 8.5% in 2013, 7.7% in 2014, and 7% in 2015. In April of this year, it was 7.6%, but that’s before summer seasonal employment kicked in, and we should expect the final 2016 figure to be considerably lower.

It’s certainly true that house prices are soaring. HuffPo reports an 18% increase; the Niagara Association of Realtors says prices have increased 20% since June of last year, with a big push from people working in Hamilton-Burlington, finding prices in Burlington, Oakville, and nearby areas too expensive. Niagara Falls Mayor Jim Diodati said demand exploded since the provincial hint at GO train service earlier this year. Around 80 per cent of new homebuyers come from outside Niagara.

In St. Catharines, housing development has been outstripped by demand for some time. The city is landlocked; with the lake to the north and with the city having expanded pretty much up to its borders with Niagara-on-the-Lake, Thorold, and Lincoln, there is not much open land left within the city limits. We have also heard from developers that misaligned permits and requirements between municipal and regional governments and general red tape discourage development in Niagara. Despite the growing demand, CMHC expects no more housing starts in Niagara in 2017 than in 2016.

There is an opportunity here, though. Skyrocketing demand could be turned into a housing and construction boom — with the right policy response. Although the city has little new land to be developed, there is certainly room to intensify development, with more efficient use of land such as townhouses, mid-rises and even high-rises fitting more people into the same acreage.

Alignment of planning requirements between municipality and region and an effort to cut red tape for developers would encourage more development. If permits, fees, and development charges were levied in such a way as to encourage affordable housing, government could steer development in that direction. Denser housing also tends to be more affordable, and makes the delivery of services such as public transit cheaper and easier.

The other side of the equation is jobs. That’s been a challenge in Niagara for a while. The unemployment rate is going down, not due to more jobs being created, but rather to people leaving the workforce. Wages are increasing at about 3% a year, according to CMHC, but when house prices rise 20% in the same year, there’s a gap. Attracting new businesses is the strategy that grabs everyone’s attention, but what is equally important is business retention — helping businesses currently operating here to stay in business — and business expansion, or helping local businesses to scale up.

Housing is still relatively affordable in Niagara, and it’ll be some time before we end up like Vancouver — if ever — but we need to head this problem off with a correct response.

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