Giving thanks for living in a place of solid construction

Posted January 16, 2012 10:25 AM by Peter E. Simpson, President & CEO, GVHBA    

I extend to readers a belated welcome to 2012. Before you read further, do something for me — and yourselves. Walk to the nearest lawn, get down on your knees, then plant a big kiss on the ground.

A scattering of thorny issues notwithstanding, we Canadians have it pretty darned good overall.

Recognizing we remain challenged by predicaments such as homelessness, housing affordability and health care, acknowledge, too, that we are not experiencing the malaise in which other countries find themselves. Our economy, financial institutions, real estate and employment are relatively sound.

A longtime colleague in North Carolina was abruptly fired, Grinch-like, just before Christmas. A Mississippi friend’s work week was sliced from five to three days, his pay reduced accordingly. Ten thousand people lined up, in sweltering conditions, to get into an Atlanta job fair. On and on it goes.

Besieged American builders are not only battling a moribund economy, they are forced to duke it out with lawmakers who, instead of rolling out the red carpet to a key industry, are initiating more impediments to progress. As it is, the homebuilding industry is one of the most regulated in the U.S.

Not nearly as polite as their Canadian counterparts, American builders are mad as hell at meddling policy-makers and they’re not going to take it any more. Well, not laying down acquiescently, at least.

Denise Dersin, editor in chief of Builder magazine, recently wrote that California home builders in San Joaquin Valley are forced to pay a smog fee, under an “indirect source rule.”

Apparently, builders are responsible for the smog created by folks who drive to work, take their kids to school, sports events, grocery shopping, doctors’ appointments, etc. You know, the daily grind.

The municipality, loathe to charge taxpayers for fear of retribution at the voting booths, figures it is easier to force builders (more accurately, homebuyers) to pay the smog fee – $500 per new home.

Dersin says an angry and stymied senior official from the Washington D.C.-based National Association of Home Builders is telling lawmakers to “just shut up.” Another frustrated builder told Dersin he is not looking for help from legislators. “I just want them to get out of the way,” he said.

The builders’ angst is understandable. Check out these roller-coaster statistics. U.S. housing starts peaked at 2.1 million in 2005, then crashed to a record-low 554,000 in 2009. There was a faint glimmer of hope last year when starts inched back to 592,000, but it’s still a long way from recovery.

And don’t even get me started on the sad impact of heavy job losses, foreclosed homes and the 12 million upside-down households whose mortgage burdens are greater than the value of their homes.

I could go on and on about American issues, but north of the 49th parallel is the home of the action.

When I reflect on goings-on in the local homebuilding industry just two years ago, I shudder. There were only 8,339 housing starts in Metro Vancouver in 2009, a whisker away from the worst total since the 1960s. Doomsayers, including some prominent pundits, warned the worst was yet to come.

The worst, whatever that meant, didn’t happen. In fact, what did occur was a formidable turnaround that left the negative nellies blubbering among their flawed spreadsheets and fractured crystal balls.

The year ended with 17,867 housing starts in Metro Vancouver, up 17 per cent from 2010 and up 114 per cent from 2009. Last year, the residential construction sector generated more than 50,000 full-time jobs on work sites and in the local businesses that manufacture all manner of building products and materials.

And nearly $4 billion was spent on home renovation, improvement and repair in Metro Vancouver.

All this produces a positive ripple effect on the local economy, as the workers spend their wages in their community. They pay taxes, and they buy homes, vehicles and a host of other consumer goods.

This year, the local housing market is expected to plateau somewhat, with no dramatic drops or sharp spikes. Canada Mortgage and Housing Corp. predicts 18,000 starts for Metro Vancouver, 28,500 for B.C. and 186,750 nationally.

There are, of course, risks that might play a key role, such as hikes in interest rates, the impact of residual economic challenges overseas and in the U.S., and the negativity emanating from scaremongering commentators, many of whom don’t know as much as respected experts have forgotten.

Last year, multi-family starts again reigned supreme over single-detached starts — 14,181 versus 3,686. The last year singles trumped multiples was 1988 — 9,287 versus 8,614. Interestingly, total starts for that year were almost identical to last year’s result, but the pendulum has clearly swung to multiples.

In fact, although common practice in Europe and North American cities like New York, I believe the current generation of Metro Vancouver homebuyers might be inclined to live their entire lives in some form of multi-family housing — town houses, row houses, low-rise condos, highrise condos.

Initially, this inclination will be tied to affordability. But, over time, buyers — first-timers to empty nesters — will appreciate the convenience of a low-maintenance, lock-it-and-leave-it condo lifestyle.

Single-detached homes hold special appeal for families. Compact yards, detached garages, finished basements, open main-floor family areas, in-law suites, superb kitchens, baths and master retreats, and custom features will secure detached homes a place in the housing spectrum for years to come.

Looking ahead, circle Dec. 21 on your kitchen calendar. That’s when the Mayan “Long Count” calendar marks the end of a 5,126-year era, and we will transition into a new world age cycle.

Hold on a second, it is just me or did you also notice that the lengthy Mayan transition timeline is freakingly similar to the drawn-out HST transition period? Only with more chanting and less ranting.

It is going to be an interesting year, on so many levels. I look forward to seeing it all unfold.

Categories: New homes, Affordability, Buying