New Homes
New Homes
Conference Board assesses new home construction
The Conference Board of Canada recently published a fascinating report on Canada's residential construction industry, looking at macroeconomic drivers, industry trends and financial performance.
The board also looked at the changing Canadian housing market and the impact of the multi-family sector, once fairly dormant but now a major driver for the housing industry from coast to coast. Although the research is national and large urban centres such as Toronto, Vancouver and Montreal significantly influence numbers, there are some very important messages for all parts of our country.
Even though the Canadian economy is only expected to realize modest growth, the Canadian consumer is in a stable position. Almost 200,000 new jobs were created last year, unemployment was its lowest in four years and consumer confidence is increasing. This confidence level is buoyed by job and income prospects, although there is still reluctance in certain parts of the country to make major purchases.
Concern has been expressed about debt levels, and the Canadian consumer has heard this message. Between 2005 and 2010, consumer credit (primarily non-asset based or credit cards) was increasing at a rate of 8.5 per cent a year. From 2010 through 2012, this has dropped to 3.2 per cent. As a result, the debt-service ratio has improved considerably from a high in early 2008 to a current low similar to the late 1990s.
All indications are that current low mortgage rates will remain intact for at least another year. Given the economic situation in Europe and other significant trading partners, inflation is not likely to be an external factor on the Canadian market.
The U.S. housing market appears to be rebounding nicely due to low mortgage rates and a declining inventory of foreclosed properties. At the height of the crash, there was a 12-month inventory of new homes available. That number has fallen to 4.5 months, essentially where it was at the turn of the century.
New home starts in the United States are at their highest in four years and likely to double by 2015. As American demand continues to grow, an impact may be felt in the Canadian market through higher cost of material goods.
Next week, we will look more closely at the Canadian housing market and how all these factors may influence it.
Mike Moore is president of the Manitoba Home Builders Association.
New Homes
Housing bubble nowhere in sight: minister
Last week, Finance Minister Jim Flaherty reviewed Canada's housing market and looked for any signs of doom and gloom.
To those who claim that Canada is on the verge of a housing bubble, the minister said that he doesn't see it. He may see areas of moderation but not disaster as was experienced recently in the U.S. Furthermore, he wished bad luck to any U.S. hedge funds betting on short-selling the Canadian market.
BMO Economics further substantiated this position by saying that the Canadian housing market is calming, not crashing. Given that some regions have experienced record highs in recent years, it is only natural to expect a slowing in the rate of appreciation.
BMO's research showed that 48 per cent of those surveyed intended to buy a property within the next five years, signalling a high confidence rate in the market.
There have been other indications of a slowdown, but no collapse. Retail sales have softened a bit and recent vehicle sales are running behind last year's levels. On one hand, employment numbers haven't gotten any better; on the other, they also haven't gotten any worse.
Inflation remains extremely low at 2 per cent or lower. The Canadian dollar has fallen a couple of points, hopefully bringing some renewed optimism to a manufacturing industry that has been hurt by the European economic crisis and problems in the U.S.
New home sales and starts projections have the Prairies as the strongest areas of Canada while B.C. appears to be the weakest. There appears to be increased pressure on the single family detached sector given a critical shortage of serviced land available. Infill housing seems to be an option for those large urban centres that have run out of new land supply.
One interesting observation is the growth in apartment starts in Manitoba. This may be the start of a trend or just an item that seems all the more dramatic given the historical lack of apartment availability and vacancies.
The renovation industry remains strong despite a slight decline across the country. The DIY market continues to grow in concert with the demand for larger projects that require professionals.
In conclusion, all indications are that the housing market will remain strong and stable for years to come. The naysayers who continue to predict doom and gloom will have to wait some more.
Mike Moore is president of the Manitoba Home Builders. Association.
New Homes
Late spring, but not too late to view show homes
It took a while, a very long while, but it appears that spring is finally here. And, who knows? Summer may be just around the corner.
We've all been trapped indoors for what seems like forever. The snow was piled over your head, it was cold and you didn't feel like going outside, no matter what the attraction. You may have missed the Spring Parade of Homes because you just couldn't motivate yourself.
Fear not, it isn't too late to visit those fantastic new homes and find the perfect place. Now that things have warmed up a bit, you can take full advantage of the opportunity to see new homes with their new ideas.
Almost all of the 124 show homes that were on display during the Spring Parade of Homes are still available for viewing. The only difference is that you don't have to put on boots, a down-filled jacket and a hat.
A leisurely weekend afternoon or one day after work is perfect for touring various new neighbourhoods to see what the finest builders in Canada have to offer. In fact, without the crowds, you have more time to talk to sales agents and learn more about the various amenities of the homes.
Another nice aspect of touring new homes now is that, with the snow gone, you can envision the full landscaping of the yard with potential flowers and plants that you prefer being placed in strategic locations.
You can purchase this style of home on another lot within the neighbourhood or somewhere else, completely done to your tastes. You may love the d©cor of the show home or want something entirely different. The choice is yours.
Of course, you might just be touring show homes to get the best ideas and concepts in products or design for a renovation project on your existing home. That's fine too, as the sales agent can tell you about the appliances, flooring, cabinets, countertops and various fixtures.
After collecting all of this information, you just may decide that you want it all.
So, now that we can actually venture outside comfortably, take full advantage of the opportunity to visit the new show homes in our most dynamic new neighbourhoods. You might just find your new home.
Mike Moore is president of the Manitoba Home Builders' Association.
New Homes
A closer look at Winnipeg's housing market
Free Press reporter Bartley Kives wrote last weekend about city planning and a recent move to more densified housing, even in the suburbs.
Of particular note were the housing starts in Winnipeg for the first four months of 2013. There have been 766 multi-family starts as opposed to 680 single-family detached starts.
Add to this mix discussion of tower structures along the Assiniboine River and in the heart of downtown and one could think Winnipeg is going all metro Toronto where the great majority of residential construction is in the multi-family department.
Before we go too far along in this premise, we should clarify something.
First, the 680 single-family starts represent a more than 20 per cent increase from last year, one of the best years in history. So, it is very clear the growth in multi-family dwellings is not coming at the expense of single-family housing.
Next, this trend in balancing housing types is something relatively recent. However, it does look like it will continue.
Multi-family starts in Winnipeg averaged about 400 units annually throughout the 1990s. It wasn't until 2007 that we cracked the 1,000 mark and, with the exception of 2009, the popularity has continued to grow: There were more than 1,300 units in 2010 and 2011.
Last year saw almost 2,000 units with projections for this year and next year to surpass that mark.
Single-family detached starts averaged around 1,100 throughout the 1990s and increased to 1,700 for the next decade. Starting in 2010 and forecasting through 2014, the number of single family starts in Winnipeg should consistently be in excess of 2,000, an almost 50/50 split.
So, even though multi-family housing is growing at a significant rate, it is not at the expense of the single-family sector. What is the proper mix? That is for the consumer to decide. People will buy what they want to buy.
Winnipeg is not a 'build it and they will come' city. We build based on demand, not outrageous speculation. Consumer demand will help direct developers and builders provide a product the consumer wants.
Mike Moore is president of the Manitoba Home Builders' Association.