After two years of declining new home enrolments, residential construction bounced back in 2010 driven primarily by strength in the condominium market. After a brief drop last year, condominium enrolments increased over 36 per cent in 2010. Freehold enrolments started out well ahead of 2009 levels and remained strong for most of the year, but declined in the fourth quarter and ultimately were down two per cent when compared with 2009.
While the global financial crisis which began in late 2008 has had a negative impact on consumer confidence, its effect on the housing market has been less than anticipated. Although 2010 was expected to be a difficult year with the introduction of tighter mortgage rules, the threat of higher interest rates and the launch of the HST, market conditions did recover. Several builders undertook new projects and given the growing popularity of condominium living, many were in the condo space particularly in the GTA where land continues to be scarce and building “up” has become a condition of the market.
Along with growth in condominium enrolments Tarion also saw a rise in the amount of security held. To protect the Guarantee Fund that is used to pay claims when a builder is unwilling or unable to resolve warranty issues, Tarion requires builders to post security in certain cases. This can be in the form of surety bonds, letters of credit, deposit trust agreements, cash or indemnity agreements. In 2010, Tarion held a total of $1.9 billion dollars, an increase over 2009 that can be attributed to the higher level of condominium construction.
Builder registrations declined in 2010 for the second year in a row, falling from 5,517 in 2009 to 5,391. During the past year, 48 builders were denied a licence or had their licence revoked by Tarion.