  Given the recent volatility in financial markets and the U.S. situation, most people are braced for a negative outlook in Canada too. (Comstock) |
The Canadian Home Builders' Association's economic research committee meetings bring together the top forecasters and industry experts from across this country three times a year to check the true pulse of the industry.
No place for rose-coloured glasses, it's a forum at which builders and construction businesses look for solid information on which to base their business decisions for the year.
Given the recent volatility in financial markets and the U.S. situation, I think most meeting participants were braced for a negative outlook. Speaking via video-link, Dr. Peter Andersen couldn't see the looks of surprise and relief on the faces of the listeners in the room in Ottawa, as he gave a positive outlook for the Canadian housing market.
Remarking that the strong Canadian dollar is the "home builder's friend," (and, of course, the homebuyers friend) Andersen explained that the strong loonie combined with minimal inflation risk have caused a complete change in the interest rate outlook. He forecast stable interest rates at worst and the prospect of lower rates with the Bank of Canada following the U.S. Federal Reserve rate cuts beginning in early 2008.
Andersen forecast 207,000 national housing starts in 2008, while Peter Norman of Altus Clayton projected 210,000 to 215,000 and Bob Dugan of Canada Mortgage and Housing Corp. called for 215,000. These are very healthy starts levels, regardless of who is the most accurate.
Peter Norman concurred with Andersen's outlook, remarking on how the astounding performance of our housing sector, particularly the resale market at a volume of approximately 500,000 units with strong year-over-year increases.
Drawing the link to the new homes market, Norman remarked that "all boats rise with the tide" and that the "cycle doesn't appear to be peaking yet."
Speaking later that day to the national meeting of professional renovators, Norman once again used the rising tide analogy as he commented on Canada's very healthy renovation market.
According to Norman, our housing affordability is good, our income growth has been good, we have generally low interest rates and our prices are generally under control, which are all good things from a buyer or builder standpoint.
Contrasting Canada with the United States, Dr. Andersen detailed just how bad the U.S. housing market is, saying even lowered interest rates won't resolve the sub- prime mortgage problem, which could result in more than 500,000 foreclosures.
For those who worry that this dire situation might repeat itself here in Canada, not to worry.
Andersen noted several key differences between the U.S. and Canada: the relative absence of speculation here; our much more responsible mortgage lending practices; our differing price trends (U.S. prices are falling fast, ours are rising moderately and consistently); our differing affordability indices (housing is still affordable here); and the fact that our housing market cycle is younger.
Andersen further noted that our immigration rate here is double that of the U.S. in percentage terms, and that our immigrants of the last three, four or five years are the homebuyers of today.
The Canadian home builders' meetings in Ottawa provide good value to members with educational sessions and opportunities for idea sharing across the country.
It's not often that these economic meetings, by their very nature, are a highlight -- but this time was different.
** Jim Vanderhoeven is president of the London Home Builders' Association.
