Last week, the Professionally Speaking column looked at some of the global reasons that the U.S. housing market is different from the Canadian market and that the big-city Canadian market is different from our local market.
In the column, it was said “don’t take our word for it” as other organizations were saying Manitoba looks like an anomaly.
Canada Mortgage and Housing Corporation, Canada’s national housing agency for more than 60 years, said Manitoba is doing just fine. To quote their fourth quarter Housing Market Outlook, their projections for Manitoba differ from their overall projections for Canada.
CMHC predicts: “For all of Canada, housing starts will remain above the 200,000 mark for the seventh consecutive year this year with a slowdown in single-detached being offset by growth in multiples. But next year, starts will drop to just under 178,000 units.
CMHC even predicts MLS® sales will ease next year. It predicts sales will be down 13.6 per cent this year and down another 4.2 per cent next year. (Again remember these are national predictions.) The strong sellers’ market that has existed since 2002 has given way to balanced market conditions in most regions across Canada.
So the national picture looks like a continued adjustment, but CMHC goes on to say this about Manitoba:
“Through the next five years, Manitoba home builders will experience the most consistent demand across Canada. By 2012, housing starts will surpass 5,000 units for the seventh consecutive year. Net migration will be a dominant factor driving new home demand. International migration will be among the highest levels on record, owing to Manitoba’s successful Provincial Nominee Program. The loss of migrants from Manitoba to other provinces will also remain low by historical standards thanks to a strong economy and low unemployment rate. These factors will boost population growth and household formation, in turn supporting new home demand. Persistent equity gains in the resale market will also enable a large contingent of owners to upgrade to a new home. Against this backdrop, annual housing starts are expected to total 5,200 units in 2009 and moderate only slightly through 2012 due to rising house prices and more balanced resale market conditions.”
So remember, when you are reading negative national and U.S. news stories about the economy and real estate, look specifically at the Manitoba market before you make critical decisions. Real estate is “local.”
Manitoba Home Builders Association: Under the headline, Housing Industry Still Healthy, MHBA points out that there are many differences between the U.S. new housing market and Canada’s. “… the simple truth is that Canada is not the U.S. and whatever happens there does not necessarily happen here; and there are a variety of experts who can give reasons why it is not the same situation. Two brokerage firms recently predicted the demise of Canada’s housing industry and the media and others picked up on these stories. These were not banks, credit unions or other financial institutions firmly entrenched and familiar with mortgages, but rather companies (one with a very limited Canadian presence) whose primary interest is encouraging clients to invest in savings strategies rather than big-ticket purchases.”
MHBA goes on to say: “… Canadian financial institutions tend to be much more conservative than their U.S. counterparts. This practice extends to mortgages on balance sheets, insured securitizations, a lack of reliance on short-term lines and prudent underwriting standards. Although our financial institutions and Canadians in general are frequently mocked for our conservative, non-risk approach, given the current financial introspection it’s a good thing.”
(More on the same topic next week.)