I was in Ottawa last weekend for meetings under the auspices of the Canadian Home Builders’ Association. The economic session is closed to the media, which tells you that it is a very frank information exchange among insiders.
I was pleasantly surprised by what I heard from Dr. Peter Andersen, consulting economist to the CHBA, and if, like me, you are having trouble processing all the mixed housing signals of late, I think you will be impressed too.
It’s definitely a V-shaped economic recovery, Andersen told the hundred or so home builders who got up early last Saturday to hear what he had to say. Andersen noted that Canadian economic growth is currently running around six per cent and that our economy created an astounding 109,000 jobs last month.
“We are not facing interest rate ‘overkill’ in this country; rather, rates are ‘adjusting to normal,’” Andersen said.
He pointed out that mortgage rates went down twice last month (although all we ever read about are the increases) and that the recent European financial crisis will mitigate interest rate increases.
“Interest rates are going to be housing friendly,” Andersen declared.
Addressing the question of whether or not there is a “housing bubble” in Canada, he put matters into perspective by noting that during the financial crisis of late 2008 and early 2009, the only homes that were selling were by those people that had to sell, which resulted, not surprisingly, in house price decreases.
What is now being interpreted as over-valuation is really a return to pre-recession levels. “The $750,000 house that sold for $650,000 in a no-bid market is now going for $750,000, but is that really a 15 per cent increase?” he asked rhetorically. Answering his own question, he stated “That’s not a bubble!”
The other thing that Andersen pointed out that intrigued me was the emerging foreign investor interest in the Toronto and Vancouver real estate markets. I’ve always said that Toronto condos are a huge bargain by global standards and it looks like investors are figuring that out as well.
– Stephen Dupuis is president and CEO of the Building Industry and Land Development Association (BILD). He can be reached at president@bildgta.ca.
