New Homes
New Homes
Allow the housing market to maintain itself
Finance Minister Jim Flaherty recently announced that he's satisfied with the Canadian housing market and he has no plans to intervene further.
As you may recall, the federal government shortened the length of mortgages from 35 to 30 years, and then to 25 years, in response to concerns about the condo markets in Toronto and Vancouver. However, the minister has said the markets in those two centres have calmed.
It now appears that the initial shock of a shortened mortgage period has faded and Canada's strong economy will support the current market.
Although Canada's economic situation is in good shape, there are still concerns about the American and European economies. In particular, there's the question of whether the U.S. Federal Reserve will eliminate the monthly stimulus or fiscal easing practice. The fear, of course, is the potential for inflation.
While job growth is always strongest in the summer, moderate long-term economic growth is still projected for Canada over the next two years. Canadians are saving more and their debt-servicing ratio continues to gradually fall.
It's interesting to note a survey of home-buying intentions over the next year peaked on the west coast and gradually declined moving east. B.C. had the highest percentage, followed by a dead heat among Alberta, Saskatchewan and Manitoba. Considerably lower was Ontario, then Quebec and finally the Atlantic provinces. But the east coast is expected to bounce back due to some pending long-term mega-projects.
On a civic level, Edmonton appears to be showing the largest increase in housing starts this year. Other large markets are expected to bounce back in 2014, although Regina and Winnipeg probably won't reach the lofty heights they experienced in the record year of 2012.
A trend that has been a staple in Winnipeg for years has started to take hold throughout the rest of Canada. We have always had rather low new home inventories because there is not a lot of speculative building here. New-home builds are based on new-home sales. That has not held true in other parts of the country, where a "build-it-and-they-will-come" attitude has been more prevalent.
Perhaps a little Prairie sensibility when it comes to spending is exactly what Canada needs.
Mike Moore is the president of the Manitoba Homebuilders' Association
New Homes
Cautious optimism prevails in housing market
The Canadian housing market is faring well, despite some numbers that may suggest otherwise.
In Alberta, housing starts are almost non-existent as renovation and restoration are the orders of the day. This trend will continue for a while until things are under control and then new-home starts will return. There's also been considerable uncertainty in Quebec due to a construction strike, again resulting in a slowdown in starts.
However, given that Canadian numbers in general are quite positive, this means that eight other provinces are performing at a level that counterbalances the two giants who may not be performing at peak levels just yet.
Canadian businesses are planning on increased hiring and employment, but have been slow off the mark this year. There are still domestic economic concerns, resulting in high part-time employment and a jobless rate still over seven per cent.
On a positive note, we seem to have better control over our personal finances. Growth in total household credit is running below historical averages and the ratio of household debt to disposable income is moving lower. With continuing current low interest rates, the debt-servicing burden remains very low.
Edmonton and Halifax have been leading the way in elevated building-permit activity this year, primarily in the multi-family sector. But permits also appear to be up slightly across Canada.
The ever-increasing condominium supply is creating temporary relief in the rental market. The national apartment vacancy rate sits at 2.7 per cent, with Calgary, Edmonton, St. John's, Toronto and Winnipeg well below the national average.
We continue to enjoy low inflation rates, well below the two-per-cent target called for earlier in the year. This will hopefully keep the pressure off the Bank of Canada to increase rates, which is good news for the new-home and renovation markets. New Bank of Canada Governor Stephen Poloz seems to have backed off a bit from a previous tightening of policy, preferring to keep rates unchanged while there is slack in the economy.
Given that the Canadian economy is not anticipated to reach full capacity until at least mid-2015, this translates into continued ideal conditions for the residential construction industry and market in Canada.
Mike Moore is president of the Manitoba Homebuilders' Association
