New Homes
New Homes
A snapshot of Manitoba's housing scene
The Canadian Mortgage and Housing Corporation recently identified 10 key factors that impact housing-market activity. Although the analysis was from a national perspective, let's drill down to the Manitoba scene.
-- Mortgage rates
Continued historically low mortgage rates will help support housing demand nationally and locally. The good news is that mortgage rates are not expected to increase significantly this year or next.
-- Employment
Employment is forecast to grow 1.9 per cent nationally, and Manitoba is traditionally a leader in low unemployment rates. People who are confident in their employment status look for stability in purchasing homes.
-- Income
Growth in income at both levels is expected to be modest, commensurate with economic growth.
-- Net migration
Although Canada is expected to continue attracting more immigrants, which positively impacts housing demand, the Manitoba government has stressed the need to continue the extremely successful Provincial Nominee Program.
-- Natural population
Although lower birth rates will lessen demand for additional housing stock, our aging population will impact the type and tenure of housing demanded.
-- Resale market
Manitoba has consistently outperformed the rest of Canada in resale activity. Although average MLS prices may not increase at previous levels, there is still tremendous demand for resale housing here. A positive resale trend usually means the same in the new home market.
-- Vacancy rates
Vacancy rates across Canada are expected to decline to two per cent. They're already lower than that locally. Low vacancy rates support new multi-family construction.
-- Stock of new and unoccupied units
As Manitobans, we tend to be cautious. We build what we can sell, or already have sold. There is far less speculative building and so fewer unoccupied inventory homes here than elsewhere.
-- Changes to mortgage insurance rules
The recent changes to government-backed mortgage insurance through the CMHC had an immediate impact on new home sales, as qualification standards meant a re-evaluation of personal finances. Any additional changes would further impact home-buying, both nationally and locally.
Mike Moore is president of the Manitoba Home Builders' Association.
New Homes
Worst fears of economic collapse abate
A year ago, Canadians were worried about the impact that outside influences were going to have on our economy.
With a couple of European countries looking like their economies were going to collapse, there was a concern of a Euro Zone breakup. The situation in the United States wasn't looking any better, and politicians seemed to be more concerned about the election than fixing the country's finances.
There was also a great deal of speculation in Canada concerning rising interest rates.
Although everyone is far from being out of the woods yet, our fears of the past year did not come to realization, much to our relief. Europe did not fall apart and is trying to get its house in order.
This impacts Canada in that financial markets and homebuyer confidence would be affected by any change in order. The U.S. had its election and has not fallen over the fiscal cliff. It's some distance from recovery, but it hasn't collapsed.
It appears as though the market for new homes in the U.S. is starting to grow again. Naturally, there are various pockets where severe unemployment and past over-growth will keep rejuvenation slow. However, other markets that had been quiet for the past few years are starting to show gradual signs of growth.
The U.S. has tied its monetary policy and interest rates to unemployment figures. As long as unemployment remains above 6.5 per cent, interest rates will remain relatively unchanged. It's not anticipated the unemployment rate will dip below this figure until 2015 at the earliest. Expect Canadian banks not to stray too far from U.S. rates.
It should be noted that U.S. renovation spending plunged by more than 25 per cent since 2007. To date, it has not shown any signs of recovery. But the opposite is true in Canada. As soon as it appeared things might cool as the recession loomed, the Home Renovation Tax Credit brought new life to the industry. It hasn't looked back since.
The Office of the Superintendent of Financial Institutions reduced the borrowing-to-equity ratio from 80 to 65 per cent, which may impact the number of larger renovations going forward.
Although 2013 is predicted to be a slow-growth year, it's a growth year nonetheless. Canada, and in particular Manitoba, are still moving forward throughout this year.
Mike Moore is president of the Manitoba Home Builders' Association.
New Homes
Getting our mortgage debt under control
Although mortgage debt remains a topic of concern for most Canadians, spending trends indicate that growth in mortgage debt is actually declining.
While the gross debt may still be increasing as there are more people and more houses each year, the rate of growth has slowed substantially. This past year was slower than 2011, and both were considerably slower than the peak year of 2007.
Non-mortgage debt is down to less than one-third of peak levels. This makes sense as some homeowners are consolidating higher-interest non-mortgage debt into their mortgage with a more favourable rate.
Roughly half of homeowners in Canada have mortgages and, on average, they have about $160,000 in mortgage debt outstanding. That's about half the market value of their homes.
In Manitoba and Saskatchewan, the average market value of a home is about $40,000 lower than the Canadian average, and our percentage of mortgage debt is the lowest in the country.
One of the ways that homeowners are planning their financial futures is by locking in mortgages at today's great rates. About 75 per cent of those active in the mortgage market in 2012 chose a fixed rate.
The recent change in amortization periods caused some initial concern as the take-up of longer amortization periods was significant. About one in three homes purchased from 2008 through 2011 involved mortgages amortized over 25 years.
However, further research indicates that homebuyers had a variety of reasons for doing so, with few related to the ability to access the home-ownership market.
More than 25 per cent indicated that longer amortization would permit them to buy a more expensive home. Another 24 per cent wanted to improve their cash flow for other spending in the early years of their mortgage.
It seems that flexibility was a key factor in determining a longer amortization, rather than affordability or accessibility. Nor does it appear that people were taking out longer amortizations in order to finance vacation homes or investment properties.
Although we must always be mindful of our debt load and mortgage levels, it does appear that Canadians, and especially those on the Prairies, are getting these numbers under control.
Sound financial planning is resulting in consumers purchasing the homes they want and within their means, while still maintaining the desired flexibility for other activities.
Mike Moore is president of the Manitoba Home Builders' Association.
New Homes
Be careful who you hire for home renovations
We first ran this column in 2008. Based on the increased amount of information gathered by attendees at the Kitchen Bath and Renovation Show, it seemed like a good idea to run it again.
Deciding who to hire for your home renovation is an important part of planning for its success. You want to work with a professional contractor, someone reputable and in business for the long term.
You need to find someone right for your particular project and someone that you can feel comfortable with whom you can develop a good working relationship.
Not everyone who offers renovation services is in business legitimately.
Some are "fly-by-nighters" -- here today, gone tomorrow. Some are "moonlighters" -- they do renovation on the side but it's not their real job.
Others are "low-ballers" who ask for cash payment and fly under the radar by avoiding registration, taxes and other normal costs of doing business.
Any home renovation, no matter the size, is an investment in your home and your life. Look for a contractor who:
-- Offers proof of being in business: GST/business registration, workers compensation, insurance.
-- Works with a written contract.
-- Offers a warranty on their work.
-- Provides referrals to previous work and clients.
-- Is happy to talk about their company, their experience and their plans for the future.
Companies that belong to RenoMark, a program for professional renovators, commit to a renovation-specific code of conduct. Check www.renomark.ca or www.homebuilders.mb.ca for more information and a listing of members.
The term renovation covers a lot. While many companies are capable of taking on a range of projects, they may also specialize in certain types or size of projects or a particular type of client. You want to find someone who has experience with the kind of renovation you are planning and can add value through their expertise.
Ask renovators directly about their experience and possible fit with your project. Have they done projects like this before and how did it go?
Ask for references and follow up.
Your renovation is likely motivated by a desire to improve your home, to make it more comfortable and enjoyable to live in -- a lifestyle decision.
Reputable, experienced renovators are often booked well in advance.
Start your search early on and be prepared to wait, if possible. A small delay is a reasonable price to pay for a renovation done right.
Mike Moore is president of the Manitoba Home Builders' Association.
New Homes
Check out the Kitchen, Bath and Renovation Show
Saturday and Sunday are the last two days of the Kitchen, Bath and Renovation Show at the Winnipeg Convention Centre. The show runs today from 10 a.m. to 9 p.m. and on Sunday from noon to 5 p.m.
If Friday's crowds are any indication, this may be the most popular show in recent memory.
This show has always kicked off the new year for home renovations and Manitobans lead the nation in that department. Manitoba is the only province where more money is spent annually on renovations than new home construction.
In that Winnipeg has the third oldest housing stock in all of Canada, home renovations are a very big part of our lifestyle.
The Kitchen, Bath and Renovation Show is unique in that it provides a free avenue for consumers to test the renovation market.
The Ask a Renovator segment of the Manitoba Home Builders' Association booth is staffed with professional RenoMark renovators who are available to answer your questions about a job you may be planning or just dreaming about. They are there to provide free 15-minute consultations to help steer you in the right direction towards an enjoyable and exciting upgrade to your home.
Just come to the show and you will be able to pick the brains of one of Manitoba's finest renovators. Whether the job is big or small; whether it's something you're committed to or just thinking about; whether you are a do-it-yourselfer or looking for a professional to help, this is the perfect place to start.
Whether you have created detailed plans, scratched out some lines on the back of a cocktail napkin or just have some thoughts, bring them along to the Ask a Renovator booth at the Kitchen, Bath and Renovation Show. Start your renovation off on the right foot with professional advice.
Along with presenting sponsors Stalwart Appliances and All Canadian Renovations, we are proud to feature Michael Penney from the Marilyn Denis Show, Andrew Downward from Candice Olson's Divine Design, and Cambria spokeswoman Mariel Hemingway.
Tickets for the grand prize are being sold by volunteers from Variety the Children's Charity. Draws are being held for beautiful kitchen cabinetry and remodelling.
Don't miss your chance to see all of Manitoba's best suppliers located in one convenient place. Tickets are available at the door.
Mike Moore is president of the Manitoba Home Builders' Association.
