Home builders face 5-year slump: Conference Board

Employment in Canada's once-booming home building sector will take five years to return to pre-recession levels, according to a study released on Wednesday.

The Conference Board of Canada said it will take until 2013 for the number of jobs in the residential housing sector to reach the 2008 peak.

Tight credit conditions for the coming years will hamper builders, who need financing to put up new dwellings, and individuals, who need mortgage money to buy new homes, said the Ottawa-based business think-tank in its latest forecast for the housing sector.

"It is now clear that the Canadian housing market is under heavy pressure," said the 11-page report, one of the board's periodic examinations of different sectors.

According to the organization, Canada's residential home-building sector will employ 530,000 people by 2013, a level roughly equal to job figures for this sector in 2008.

In the meantime, the sector will shed 20,000 jobs between 2008 and the end of 2010, not a stunning decline. The industry, however, had averaged employment growth in excess of six per cent annually between 2005 and 2008.

Slumping revenue and earnings

Homebuilders' profits, a factor that often drives hiring decisions, will not recover to pre-recession levels by 2013, the Conference Board forecast.

In 2008, the industry as a whole earned $3.9 billion in profits. By 2010, earnings will slip below the $3 billion level and only reach $3.4 billion by 2013, the last year of the board's forecast.

With overall prices rising by approximately two per cent a year, however, home builders would actually earn less than $3.4 billion in 2008 inflation-adjusted dollars.

The Conference Board said the sector's revenue picture is equally dim for the next five years.

At its most recent peak, sector revenue hit $103.6 billion in 2008. The board now expects home builder sales won't cross the $100 billion threshold until 2013.