A new report says the real estate boom in Ontario and British Columbia has been a boon for housing-related jobs, but a home-price correction won’t trigger a major bust for the labour markets in those provinces.
DBRS says in a report today that the hot housing markets in B.C. and Ontario boosted job growth over the last decade in sectors such as construction, home-related retail and real estate by 28% — faster than other parts of Canada.
The ratings agency says if house prices fall dramatically, other sectors of the economy should be able to absorb those jobs thanks to strong economic growth and steady population gains.
“Ontario and B.C. do not exhibit the clear labour market imbalances seen in some U.S. states during the U.S. housing boom,” says the report. “Housing-related job growth has been substantially lower in Ontario and B.C. than in the boom states. In addition, strong demand for housing in Ontario and B.C., driven by economic expansion and population gains, appears to provide a firmer foundation for housing-related employment growth.”
But risks remain.
“A sharp and sustained fall in home values could weaken bank asset quality and generate adverse wealth effects for households, all of which could dampen consumption and investment,” the report says. “An external shock that results in an economic downturn could amplify the adverse effects of the housing market correction and create negative feedback loops that further dampen economic activity.”
That being said, “a correction in housing prices in Ontario and B.C. in isolation is unlikely to cause major disruption to their local jobs markets.”