by Todd Lewys
After experiencing eight record-breaking years for new home starts in Manitoba, it was bound to happen.
According to the recently-released Canada Mortgage and Housing Corporation (CMHC) Housing Market Outlook, new home starts are expected to peak in 2013, with numbers starting to level off in 2014.
“While construction is expected to remain elevated over the near term,” said Dianne Himbeault, CMHC’s senior market analyst for Winnipeg, “conditions supporting housing demand are easing, including lower levels of international immigration and moderating job and income growth.
“These factors will contribute to a slightly lower number of starts in 2014,” she added.
Mike Moore, president of the Manitoba Home Builders Association, said the report doesn’t come as a major surprise. “We expect 2013 to be about the same as 2012 was,” he said. “As was the case last year, we’re at our capacity, which is great.
“Still, you can’t expect to stay at that pace forever,” he added. “I would agree with the CMHC report. Expectations are that 2014 will be a bit cooler than 2013.”
CMHC is forecasting that single-detached starts will finish 2013 with a gain of three per cent over 2012, reaching 2,200 units in Winnipeg. In 2014, CMHC expects rising inventories will cause builders to ease production to 2,125 units, which represents a 3.4 per cent decline.
Huntington Homes’ Rob Swan said he isn’t convinced that 2014 will be the year new housing starts start to slow down. “We’d anticipated a bit of a slowdown this year, but this year has been as busy, or even busier than last year was,” he said. “I don’t foresee anything too drastic happening next year. No question, we don’t have the pent-up demand that drove starts so strongly in previous years, but the other factors that have driven the new homes market remain strong.”
Those factors, such as low interest rates, a strong provincial economy and a steady immigration, remain stable.
“I don’t have a crystal ball, but from what I hear and see, the Bank of Canada isn’t going to change interest rates, and Manitoba’s economy is still performing well,” he added. “And I don’t see immigration into the province slowing down much, if at all.”
Moore said the immigration rate may slow down a bit, but not enough to have a significant impact on housing starts. “From what I’ve read, immigration numbers may drop from about 13,000 in 2013 to around 11,000 in 2014. That may slow demand for new housing a bit, but not in a big way. Our builders still figure to be busy. The market won’t be quite as busy as it was in previous years, but it will still be very, very steady.”
Hilton Homes’ Spencer Curtis agreed. “Even if that prediction is correct, it will only mean there will be a slight slowdown in business. We’ll be moving back toward returning to historical numbers. That means there should still be plenty of demand to spread around, so everyone (i.e., all the various builders) should be happy. The demand for new homes is still going to be there, maybe just not quite as strong as before.”
He added that it’s important for builders to keep things in perspective.
“As a builder, you have to remember that we’re coming off a period of all-time-high demand,” said Curtis. “Even if there is a bit of a slowdown, it will still work well with the overall growth model that’s always characterized Manitoba’s economy — slow, steady growth. Business is still going to be good. As builders, we’ll still have lots of work, and will be able to happily accommodate all the needs of home buying consumers.”
Should the housing start slowdown be more profound than predicted, there’s still no reason to panic, added Swan.
“We’ll move forward as we always have — with cautious optimism,” he said. “Basically, we do the same thing no matter what. If the market goes down, we’ll adjust accordingly by building less, having a lesser number of lots in inventory, and by controlling our costs. If the market stays up, we’ll build homes on a steady basis, keep a decent inventory of lots – and still control costs so we can make a profit. That said, I don’t see anything too negative happening in 2014.”
Moore concurred, saying, “New home starts will still be strong, just not quite as strong as they were in 2013. Business will be steady, just like Manitoba’s economy. That’s good news.”