New Homes
New Homes
Boomers continue to influence housing market
Much has been written about baby-boomers -- their numbers, culture and economic impact. This generation has had, and will continue to have, a very significant impact on the housing market as well.
The largest annual increase in number of births occurred between 1945 and 1946 (15 per cent), which started the boom. The largest decrease was between 1964 and 1965 (-8 per cent), thereby ending the boom.
During the boom period, the average number of children per woman was 3.7, as opposed to under 1.7 now. It's therefore no surprise that this same generation has had and will continue to have a significant influence on housing demands.
In the 1970s, Canadian housing starts reached record numbers thanks to boomer buying patterns. Children of boomers, or echo-boomers, have been driving the market recently. Their impact continues to be felt today and will do so into the future.
Some believe that boomers may create a negative effect on the market as they move towards retirement. The argument is that this group will be moving exclusively into condos and retirement homes, thereby leaving a glut of empty homes behind.
But recent experiences here do not support this theory. Winnipeg has one of the lowest inventories of resale-home listings in Western Canada. We have less than half the number per capita in Calgary or Saskatoon. When you consider that more than 10,000 immigrants arrive in this city every year, it's clear that the market can sustain additional housing choices.
As well, not all retirees opt for downsizing or away from single-family detached housing either. Many stay in their current houses and choose to renovate in ways that help them adapt to certain age limitations. Others move from two-storey homes to bungalows -- their children may have moved out, but there needs to be room for visits from grandchildren.
Lifestyle also will continue to be a major factor in determining where boomers want to live. If they spend a portion of the year down south, they will want a home that does not require constant attention. Unlike older areas, walking paths are an important aspect of new community design, and having nearby recreation facilities is a key influencer in boomer home selection.
Baby-boomers are not fading away anytime soon. They will continue to have a strong influence on housing choices in Winnipeg and throughout Canada.
Mike Moore is president of the Manitoba Homebuilders' Association.
New Homes
Steady long-term increases in housing market spell success
A look at housing starts in Winnipeg for the first half of 2013 shows that we are on pace to match last year's solid performance.
Single-family detached starts are tracking almost 200 above 2012, while multi-family starts are up 71 from last year.
One could argue that the numbers are flat or one could argue that they are consistent. Either way, the market remains strong. This scenario plays out very similarly throughout the province.
The rest of Canada, to borrow from Charles Dickens, is a tale of two cities. Housing prices have been stable in Atlantic Canada and across the Prairies, but Vancouver has seen prices drop by about five per cent. This is due to the somewhat irrational splurge in Vancouver's condo market in that centre which led to Ottawa tightening mortgage rules. In Toronto, prices have levelled out after some recent dramatic increases.
As I've said many times before, numbers from these two cities can completely skew the Canadian picture. When you consider that Toronto is increasing in population by about 125,000 a year, you can see how overwhelming an impact the city has on an overall Canadian analysis. If Toronto and Vancouver decrease by five per cent, even though the rest of Canada remains level, the Canadian market will show a two- or three-per-cent decline.
However, no matter how one looks at these numbers, there is no evidence of a housing bubble in Canada. The over-building and price spirals that took place in the United States and some of Europe are not happening here. Nor is Canada experiencing the over-abundance of office-building and shopping-centre construction that accompanied the unwarranted housing starts in those areas. So, do not mistake our national two- to three-per-cent drop in prices in two urban centres with the massive numbers that occurred south of the border.
Canada's unemployment rate continues to be under control. Household net worth continues to soar to new heights. Immigration numbers also remain strong. Plain and simple: Canada is a great place to live.
Housing in the Canadian market remains a strong investment. Fixed-income investments such as GICs and bonds have recently produced low returns, and commodity stocks have also not done well. Even gold and oil are down from recent highs. For steady, long-term increases in value over time in a productive, safe and reliable market, it's tough to beat the performance of a Canadian home.
Mike Moore is president of the Manitoba Home Builders' Association.
New Homes
Builders want return to 30-year mortgage
Canadians have been extremely diligent in paying off their mortgages as quickly as possible, generally in about two-thirds of the original intended time period.
In a recent report by the Canadian Association of Accredited Mortgage Professionals (CAAMP) for mortgages completed from 2010 to 2013, it was found that the actual average amortization length was 11.7 years, compared to an original average term of 17.9 years.
Despite the propensity of Canadians to be cautious in their spending habits, over the same period of time the federal government has reduced amortization periods from 40 years to 25 years.
CAAMP argues that Ottawa's changes have caused a 15-per-cent decline in new-home starts, which in turn has had a negative impact on jobs and the economy. They also argue that the resale business has suffered from this reduced amortization period.
The association's primary concern is with the first-time buyer who, given all of the other costs associated with buying that first home, is having trouble getting into the market. Their recommendation is to allow first-time buyers a 30-year period if they financially qualify for 25.
Such a move would permit a better cash-flow situation for the buyers over the length of the payment period. As first-time buyers complete renovations, purchase furniture and appliances and cover other expenses associated with owning a first home, they could then concentrate on paying off their mortgages more quickly.
Surveys over the past two years have shown that 48 per cent of Canadians intend to buy a property in the next five years. New-home buyers may concentrate on amenities for the home over that initial mortgage period, so any change to rates after the current period concludes will not result in any financial hardship.
The Canadian Home Builders Association shares the concerns of CAAMP regarding the reduced amortization period. The CHBA feels that the proven performance of Canadians in managing debt, the superiority of our financial institutions in qualifying buyers and the traditionally low default rate of buyers justifies a review of the current amortization period with an eye towards reinstatement of the 30-year mortgage within the next few years.
Mike Moore is president of the Manitoba Home Builders' Association.
New Homes
Looking for some shelter in flood-hit Calgary
I recently attended some national meetings of various homebuilder associations from across Canada in Calgary before and during the flood.
I went out a day early to join some friends for a round of golf at Stewart Creek in Canmore. It's a beautiful area -- tree-lined with a small creek running through the course, houses and condos nearby.
Not anymore. Stewart Creek became a raging river which wiped out the trees, the course, many of the houses and the highway connecting Canmore with the rest of the area. Fortunately, I missed the devastation by 24 hours. Those that live and work there will spend months trying to rebuild what they lost.
Our meetings were in downtown Calgary, across from the tower and about two blocks from city hall. Thursday morning, we were told we might have to alter our schedule somewhat, but that everything would be OK. By Thursday evening, it was obvious this was a more serious situation, especially when we began seeing footage from Canmore. We were told that anyone who didn't have to be downtown on Friday probably shouldn't be there.
I'm from Manitoba, I've seen floods. They happen all the time here, but not like this.
By 8 a.m. Friday the power was out at the hotel. Emergency vehicles were abundant in the area. By 10 a.m. we were told all hotels were being evacuated within the next two hours and only one bridge out of town was still open. City hall, the zoo and numerous parkades, underpasses and other buildings were all under water.
I managed to get out of downtown but couldn't get another hotel room elsewhere or a flight out of town for another 24 hours. During that period of circuitous cab rides, I saw some of the widespread effects of the flood on the city of Calgary. More than 100,000 residents had to leave their homes, every downtown hotel was emptied, businesses were left vacant and major thoroughfares, bridges and other exit routes were closed. Water was everywhere.
I just had to deal with a minor inconvenience -- 24 to 36 hours of wondering where I was going to stay. Tens of thousands of Alberta residents are wondering what is left of their homes and if and when they will be able to return and start the restoration process.
Food, clothing and shelter are three basic necessities. Let us never take the importance of shelter for granted.
Mike Moore is president of the Manitoba Home Builders' Association.