Consumer confidence fuels housing recovery
By Rose Simone, Waterloo Record
When John Geha, president of Coldwell Banker Canada, was recently booking a trip from Toronto to Calgary, he was told every single flight was oversold. He has also learned that car rental companies are adding cars to their fleets and hotel managers are seeing business travellers coming back.
To Geha, who runs the Canadian branch of a real estate network that has 267 offices in Canada and 3,600 worldwide, these are all strong signs that an economic recovery is well underway.
“It’s not just in the number of houses being sold,” Geha said Tuesday during a visit to the Coldwell Banker Peter Benninger Realty offices in Kitchener. “I know the consumer is out there,” he said.
There are signs of life in the housing market as well, he said. Despite some “pockets of concern” in areas such as Windsor, which is closely tied to Detroit and the automobile manufacturing sector, resale home sales have been up in recent months in many regions across the country, he said.
Builders in the western regions, including parts of British Columbia, are now also seeing a surge in new home building, and “that will trickle its way across the country,” he said.
Geha said he is not in a position to make pronouncements about whether all of this signals the end of the recession that started at this time last year, but he sees the return of consumer confidence as a big factor fuelling the housing market recovery.
Canada was always on more stable ground with its banking and housing sector compared to the United States, but the global recession did have a big impact on Canadian consumer confidence, which in turn affected the housing market last year, he said.
“There was a period of six to eight months where we had a dramatic slowdown, but we were never in the crisis that the United States was in. The foundation did not crumble underneath us.”
Today, there are numerous signs consumer confidence is bouncing back, in both Canada and the United States, he said.
Regardless of the economy, real estate is a good investment because people will always need shelter, Geha said. But speculation is always risky, and he urged people to make careful decisions by looking at real estate as a long-term investment and using real estate professionals to guide them in making a decision.
“You can build wealth with real estate, but don’t think of it as a quick fix, or as something that can be flipped tomorrow,” he said.
Geha said many first-time buyers who are young career-focused people, ages 25 to 40, particularly among women, are entering the market. They may have delayed getting married and having children, but they have been working and saved money, so they are ready to buy.
“There is a very serious female consumer contingent out there that we need to pay attention to,” he said.
Despite the return of consumer confidence, Geha said he doesn’t think interest rates will start to skyrocket. “We are concerned about inflation and interest rates but we are convinced that both the federal and provincial governments will see the need for the real estate industry to thrive.”
For every home that sells, people spend an average of about $48,000 on remodelling, redecorating and buying appliances for that home, which creates retail jobs, he said.
For every new home that is built, an average of 360 retail products are manufactured to go into that new home, he added.
There is also an infrastructure for every home, including cable, schools, libraries, retail shops and services, all of which generates employment. “Real estate does drive the economy, so when real estate is moving, jobs are created,” he said.