I recently attended meetings of the Canadian Home Builders' Association and listened to two economists predict not only Canada's economic future but also that of most of the rest of the world.
Of course, what interested most of the room was how this was going to affect the housing market. The usual clichés were used. "Cautiously optimistic," and "long-term slow growth" were popular phrases. Naturally, the world situation started with Europe, where a slow recovery was projected to be experienced just before another recession lasting until 2014. The Asian economy could experience a slowdown, too.
How does that impact Canadian housing? If Canada loses two major trade partners for our natural resources and manufactured goods, we experience an export problem that hurts our economy, which slows down our confidence in buying larger-ticket items.
On the plus side, they called for the U.S. economy to turn the corner, expand by 2.5 per cent this year, implement spending cuts and get rid of previous incentives and tax cuts. Manufacturing and housing in the U.S. are showing signs of improvement. This will strengthen the American dollar and probably decrease the overvalued Canadian dollar, which will in turn help our ability to export and trade worldwide.
Canada has posted strong job gains in the private sector and there is a call for plus two per cent GDP growth for each of 2012, 2013, and 2014. There was some concern about increasing household debt but consensus that it had not reached a crisis situation. It was acknowledged that the centre of balance for Canada had shifted to the west as energy, rather than manufacturing, was leading the way. All four western provinces were projected to have the highest growth rates.
As for the residential construction industry, they made it very clear that there was no bubble, no oversupply and that new home prices would continue to increase by reasonable and healthy margins as opposed to erratic jumps.
The construction industry as a whole is at its peak level of activity. Canadians continue to spend on renovations at an ever-increasing pace with Manitoba leading the way.
Finally, and most importantly to the room, they agreed that mortgage and interest rates were not going up any time soon. It would be several years before any kind of slight adjustment might be made. This was good news to all.
Mike Moore is president of the Manitoba Home Builders' Association.
