Small is Transient: Housebuilding Firms in Ontario, Canada 1978-98

Abstract

The North American housebuilding industry has been neglected in urban and housing studies. Its firm size structure and instability have long been cause for concern, but have rarely been given more than anecdotal treatment. This paper examines the transience of housebuilders in Ontario from 1978 to 1998. Using a census of builders provided by the Ontario New Home Warranty Program, the industry's firm membership is found to be extremely transient. Most transience comes by way of new firm formation and permanent firm exits from the market, while a small cohort of builders withdraw from and re-enter the market on a regular basis. The business cycle speeds and slows these processes but flux is due primarily to the annual turnover of small builders. To reduce transience, policy makers must decide between slowing entry and perhaps raising industry concentration or allowing continued firm entry and probably transience.

A multidimensional decisions modeling framework for built space supply

“…The building industry is thus dominated numerically by small-to medium-sized builders, but at the same time there is a significant presence of heavy-weight players in the industry. Buzzelli and Harris (2003) similarly report that the building industry in Ontario has a high number of small-to medium-sized builders. The total volume of the sales from the building industry in 2006 was approximately $5 billion, with small to medium builders contributing $800 million of this total.…”

“…Most of the time, the types of space built by the builder are highly correlated to each other. Builders are localized in terms of their operations (Buzzelli and Harris, 2003). Moreover, builders and their associated contractors/subcontractors typically specialize in building specific types of space.…”

“…An analysis of the InfoCanada 2 dataset for businesses operating in the GTA in 2006 shows that there are fewer than 500 builders operating in the GTA. Buzzelli and Harris (2003) suggest that the number of active developers is even less than the number of builders. Developers usually work with the same builders, and in very few cases, the developer of land also builds the space.…”

“…Instead, they heavily rely on contractors and subcontractors to actually do the job for them, and the builders' employees are usually only managing the project. Buzzelli and Harris (2003) reported that this relation between the builders and contractors is spatially localized and long term.…”

Regulation, Innovation and Technology Diffusion: Evidence from Building Energy Efficiency Standards in Germany

“…the German construction sector accounts for about 11% of total GDP) and covers a wide range of services, crafts and branches in industrial manufacturing. In particular, the construction industry is not concentrated and is highly competitive (Buzzelli & Harris 2003) -this makes us believe that the pressure and incentives to innovate are spread out along the supply chain.…”