I recently attended a session at a national meeting that dealt with forecasting impacts on Canadian urban centres specifically in relation to low rise or single family detached housing.
Although an analysis of the situations in Toronto and Vancouver prompted the study, the researcher also looked at 12 other Canadian cities.
Naturally, one of the biggest concerns in Toronto and Vancouver was land supply. It was contended that both cities have essentially grown to the limits of their boundaries and that is why they have been growing vertically in recent years. The other cities were not under this kind of pressure.
The contention was that employment is the biggest factor in new home starts. If unemployment rates are low, starts will be healthy. Given that the Canadian unemployment rate is around eight per cent and Manitoba remains significantly under the Canadian average, this would bode well for continued growth in new home starts here. In addition to employment rates, job growth opportunities also play a factor.
Conditions in the resale market also play a major role in new home starts. The softer the resale market, the less of a hurry the consumer is in to make a decision. They also have more time to decide between resale and new.
With a soft resale market, the opportunity for brokering a discount deal is more likely. Winnipeg has a very tight resale market with one of the lowest listings ratios in the country. With bidding wars being common and Winnipeg continuing to be a seller's market, the new home option remains attractive.
Surprisingly, the author stated that interest rates would not be as large a factor. Not that they wouldn't be a factor, but not as much as employment rates and resale market conditions. My guess is that as long as consumers are gainfully employed, Canadian financial institutions play a major role as watchdogs to ensure that we don't over-extend ourselves.
Finally, the report keys on an additional factor that impacts us here.
Immigration is a massive driver in Manitoba. We have been a national leader in aggressive immigration initiatives that have paid huge dividends for our population, our economy and new home starts. Our immigration successes need to continue for the new home market to continue to flourish.
In summary, the primary factors highlighted in this study indicate continued growth in Manitoba with a constant eye on influencing factors.
Mike Moore is president of the Manitoba Home Builders' Association.