Americans are cutting back on discretionary spending, as reflected in the lowest vehicle sales period in the last 10 years. If it were not for personal tax rebates totaling more than $100 billion, the situation for the average U.S. taxpayer would be even worse. Banks are not taking any credit risks and, when they do, the payoffs are extremely high.
New housing starts in many markets have practically disappeared. We have seen American-based real estate companies offer seminars in Winnipeg recently in an effort to stimulate buying by Canadian snowbirds in the southern U.S.
The big question on many people's minds is "Will this happen here?" In a word, no.
Canada's mortgage market has avoided the turmoil in the U.S. Sub-prime lending is only about five per cent of our mortgage market. Our banks do not engage in reckless lending. In fact, mortgage rates continue to show substantial declines due, in part, to Bank of Canada rate cuts.
Canadian motor vehicle sales have continued to increase steadily over the past four years. This is an indicator of consumer confidence and shows that Canadians are not shying away from big ticket, discretionary spending.
Oil prices continue to rise creating, in effect, the same impact as a tax increase. Consumers have a greater incentive than ever to invest in energy efficiency. However, as stated by the Canadian Energy Alliance Association, new homes in Manitoba are the most energy efficient in Canada.
Nowhere else in all of Canada do new homes meet energy efficiency standards than those of Manitoba builders. Manitoba Home Builders' Association members are committed to maintaining this lofty position.
Granted, housing starts are down considerably in Alberta. However, they are down from all-time record highs, not traditional patterns. Manitoba and Saskatchewan are both showing positive population flow from Alberta. Employment opportunities here continue to increase.
Manitoba is enjoying its second strongest year in terms of new housing starts in the past 20 years. Single family detached units are actually above last year's record-setting pace. Manitobans are not only buying new homes, but they are also putting equity into the homes they currently own.
Manitoba leads the country in the percentage of increased renovation spending compared to the first quarter of last year.
All of this growth is at a steady, moderate rate. Manitoba's new home industry has never been based on a boom or bust mentality. The development of sustainable communities is always a primary consideration for both the developer and the builder.
The housing industry has relied on a well planned, calculated growth that the market can bear. Manitoba home builders work very closely with the province and various municipalities to plan according to the market. They build based on what can be sold, according to consumer demands.
Quality has always been at the forefront, and the value of an investment in a new home has consistently paid dividends.
Current and historical economic indicators demonstrate that Canada, and especially Manitoba, will not face the current crisis being experienced in much of the U.S. It's not going to happen here.
This column prepared by the Manitoba Home Builders' Association
