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Don't tar Manitoba with the same economic brush

The Canadian Home Builders' Association recently published its monthly economic update, evaluating most of the factors that impact the residential construction market in Canada and explaining why we are where we are and where we're headed.

As I've said in the past, employment figures and consistency of employment tend to be the largest indicators for the housing market. Canada's unemployment rate continues to inch higher and, even though Manitoba's rate is a full two percentage points below the national average, all eyes will be on this measurement.

With Canada's GDP growing at a barely noticeable rate, other factors come into play like motor-vehicle sales, which are a good indicator of overall consumer trends. Nationally and locally, these sales are increasing slightly. This is good news in that it implies healthy consumer confidence.

Interest rates in the United States will be locked at record low levels throughout 2013 and therefore will remain low in Canada too, another good indicator for the housing industry.

As I say in this column time after time, be very wary of reports out of Toronto that say Canada's economy is softening. Their Canada consists of one city; maybe two. Our Canada goes from coast to coast and includes every province and city.

Economic conditions have softened in Ontario and British Columbia, whereas Atlantic Canada and the rest of the West are strong.

With residential construction starting to rebound in the U.S., look for lumber and other building materials to increase in price in the near future. Hurricane Sandy also increased demand for materials south of the border.

Renovation spending has increased slightly on a national scale, although not to the level originally anticipated. The key indicators are hardware-type store sales and existing home sales (people tend to renovate before they list a home and after they buy one).

This is not the same case in Manitoba where resale-home demand continues to grow.

Canadian residential building permit data indicates that starts will decline slightly in 2013. However, one has to look at where that decline will take place before getting nervous.

High-rise starts are expected to decline by 30 per cent and low-rise sales will be primarily impacted by land availability. Guess where these two factors are the greatest? Not Manitoba.

Mike Moore is president of the Manitoba Home Builders' Association.

 

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