I was asked the other day if I had anything positive to say about the current state of our market, and my answer was, of course.
Let’s face it, the vast majority of industries in our province are somehow tied to Oil and Gas, and housing is no exception. The performance of the housing market is usually seen as a response to the performance of the resource markets. We have, for the past five years, been in a relatively solid ‘sellers’ market. With a combination of low interest rates, high in-migration and a restricted local housing supply, our market has been very active and we, as builders, have been very busy keeping up. So when I was asked to provide my positive spin on the current market I wanted to point out the following:
- Those same conditions that existed during the busy time (low interest rates, high in-migration and low inventory) are still present today. Particularly low interest rates. What has changed however, is the decrease in investment buyers. Leaving more inventory available for those looking to purchase a home for themselves. With decreased absorption numbers comes a greater balance in the market, essentially moving the focus in a direction more favourable to the buyer. Combine this with upcoming increases in fees for both Land Titles registration (introduced in the latest provincial budget) and for CMHC insured mortgages, and you have every reason to consider the benefits of homeownership today.
- When times are busy, focus inevitably turns towards production. It is our job to build well, and within the timeframes that our purchasers expect. Unfortunately, when the industry is growing at such a quick pace, many important processes and efficiencies can get sidelined, which may lead to increased expenditures and extended schedules to correct errors in production. When the market slows down, as it has now, it gives us all a chance to catch our breath, and look inwardly and critically at our organization. How can we build it better and more efficiently? There is huge opportunity in answering those questions that’s provided only by a market shift like this one.
- We count on each other. Building relationships is a philosophy firmly entrenched in our industry. Between builders and our partners (trades, professionals, bankers, suppliers), between us and our homeowners, and between our industry and our community. With almost 40 000 Calgarians employed in the construction industry, we have a huge responsibility to do the best we can to keep people working. If we don’t, then those people will find jobs elsewhere, and they won’t be here when the market bounces back.
- A downward trending economy puts pressure on prices to come down. This gives purchasers a potential savings boost that they wouldn’t normally see in a hot economy. If they missed the chance to own a home last time around, hopefully circumstances are better in this downturn to take advantage of those more affordable prices. If that’s the case, this is a great time to explore what’s out there.
Thankfully, we have begun to see stability in the price of oil. If the bottom has been reached, then there is likely only one direction that the price of oil will be headed. The most important thing is to recognize that many opportunities exist, regardless of our current economic situation.
I hope this provides some insight for those curious enough to read it, and if any questions remain, our presentation centres are always open with professionals ready to answer them.