Last week, Finance Minister Jim Flaherty reviewed Canada's housing market and looked for any signs of doom and gloom.
To those who claim that Canada is on the verge of a housing bubble, the minister said that he doesn't see it. He may see areas of moderation but not disaster as was experienced recently in the U.S. Furthermore, he wished bad luck to any U.S. hedge funds betting on short-selling the Canadian market.
BMO Economics further substantiated this position by saying that the Canadian housing market is calming, not crashing. Given that some regions have experienced record highs in recent years, it is only natural to expect a slowing in the rate of appreciation.
BMO's research showed that 48 per cent of those surveyed intended to buy a property within the next five years, signalling a high confidence rate in the market.
There have been other indications of a slowdown, but no collapse. Retail sales have softened a bit and recent vehicle sales are running behind last year's levels. On one hand, employment numbers haven't gotten any better; on the other, they also haven't gotten any worse.
Inflation remains extremely low at 2 per cent or lower. The Canadian dollar has fallen a couple of points, hopefully bringing some renewed optimism to a manufacturing industry that has been hurt by the European economic crisis and problems in the U.S.
New home sales and starts projections have the Prairies as the strongest areas of Canada while B.C. appears to be the weakest. There appears to be increased pressure on the single family detached sector given a critical shortage of serviced land available. Infill housing seems to be an option for those large urban centres that have run out of new land supply.
One interesting observation is the growth in apartment starts in Manitoba. This may be the start of a trend or just an item that seems all the more dramatic given the historical lack of apartment availability and vacancies.
The renovation industry remains strong despite a slight decline across the country. The DIY market continues to grow in concert with the demand for larger projects that require professionals.
In conclusion, all indications are that the housing market will remain strong and stable for years to come. The naysayers who continue to predict doom and gloom will have to wait some more.
Mike Moore is president of the Manitoba Home Builders. Association.