Al­low the hous­ing mar­ket to main­tain it­self

Winnipeg Free Press - Section F - - HOMES - By Mike Moore

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

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