Local housing market, economy remain strong Things won't reach last year's levels, analyst says, but 2009 should be decent STEVE BARTLETT The Telegram

Bruce Guest (left) takes measurements to check if the ground is level in a hole for a new home foundation on New Pennywell Road. At right is co-worker Craig Duke. Both are employees of Miller Equipment. - Photo by Keith Gosse/The Telegram

The economic news nationally and internationally may be gloomy, but Newfoundland and Labrador's economy is much, much brighter, according to Chris Janes.

The provincial economy - particularly in the St. John's metro area - is expected to remain strong this year, bucking national trends and despite some local layoffs, slowing resource revenues and the weak global conditions, says Janes, senior market analyst with the Canada Mortgage and Housing Corp. (CMHC).

"It's still on the up and up locally in terms of our labour markets, economy, economic health overall, government's fiscal situation, migration factors ... and it's just a lot of positive activity that's hard not to be focused on," Janes said following his address to a packed housing seminar in St. John's Wednesday. "We still have very strong consumer spending, and that's key to any province's economic health and, right now in terms of all provinces in Canada, we have the strongest consumer spending of all."

Wednesday's seminar was presented by CMHC and billed, Looking Ahead - Gaining Perspective.

Other speakers were Alex Macdonald, a regional economist with CMHC, and Ken Hicks, a manager of economic research with the provincial Department of Finance.

According to Janes, the province's strong economic indicators suggest the St. John's area housing market will perform well in 2009 - but not quite as well as 2008. It saw a record 1,485 single detached housing starts and benchmarks in sales and prices, 19.6 and five per cent, respectively.

The St. John's region, Janes noted, was the only price-growth market in Canada in the fourth quarter of last year.

"Right now, (the market) is more in line with where we were prior to 2008, back more in line with 2006-2007 levels," he said. "But, again, if we go back to those years, they were positive years as well."

Janes said home prices are not expected to decline this year, although they likely won't increase much either.

In the face of a glum global climate, Janes said, there is a lot of apprehension among people, most of whom don't realize how well the province is performing.

Much of that fear, he suggested, can be eliminated through putting the economy into perspective, like he tried to do during his address Wednesday.

"I think a lot of people in this room probably walked out of here feeling really good about where the economy is right now and where the economy is headed as well as the housing market.

"Hopefully, that filters down to the average everyday consumer and is reflected as accurate in the numbers we projected."

Edwina Baldwin, president of the Newfoundland and Labrador Association of Realtors, keeps regular tabs on the factors Janes presented. She wasn't surprised by his presentation and she also sees a need for locals to have better knowledge of what's going on.

"I don't think the public is as well aware of it as they should be, even though we try to give out as much positive results as we can. Not to make it look rosy. I believe in giving the people the correct results and then they form their own position," she said.

Many mainland pundits, Janes said, don't quite get why Newfoundland and Labrador is doing so well.

He said he has been interviewed by national media about the trends and was quick to point out the contributions of the oil and gas industry, which accounts for a third of the province's GDP.

"They can't understand why we continue to buck all the national trends in terms of our housing activity, our employment numbers, our consumer spending. ... Even our auto sales have been strong when you compare them to the national averages, which are way down. It's been very positive. It's been a very good news story from my perspective overall, and I try to continue to get that message out there."

Janes noted that the province's low fertility rate and aging population will provide a future challenge for the housing market. To alleviate problems, he said there is a need to focus on in-migration.

sbartlett@thetelegram.com

MARKET MOVES

CMHC's forecast for the local housing market:
Total housing starts for 2009 between 1,475 and 1,725
Total housing starts for 2010 between 1,525 and 1,850
MLS sales between 3,200 and 3,700 for 2009
MLS sales between 3,300 and 3,800 for 2010
Average sale price between $187,500 and 198,500 for 2009
Average sale price between $192,500 and $202,500 for 2010
Vacancy rates expected at .5 to 1.5 range in 2009
Vacancy rates expected to be 1.0 per cent to 2.0 per cent in 2010
Two-bedroom rental rates running between $675 and $725 in 2009
Two-bedroom rental rates running between $710 and $750 in 2010
Condo sales and starts fluctuate, and amount to about 3.2 per cent of MLS sales
Prospective buyers prefer mid-priced neighbourhood condos
Source: Chris Janes, CMHC