While the tone of most news stories these days ranges from depressing to devastating, Frank Giannone remains upbeat.
Orangeville, Ont.
While the tone of most news stories these days ranges from depressing to devastating, Frank Giannone remains upbeat.
Giannone is president of the Ontario Home Builders Association (OHBA), and oversees an industry that has seen provincial housing starts plummet from over 75,000 in 2008 to a forecast of between 40,000 and 45,000 in 2009.
CMHC has housing starts this year at 62,000 in Ontario,” Giannone said recently at a Dufferin Home Builders Association dinner in Orangeville, Ont.
“I would suggest that’s optimistic. More likely we’ll be around 40,000 to 45,000 starts.”
Yet, while predicting a plunge of nearly 40 per cent in new house construction, he still spoke in an upbeat manner.
“It’s not a meltdown (in Canada) like it is in the U.S., where everything has ground to a halt,” Giannone said. “Of course, we are not where we want to be, but it’s still better than not building anything at all.”
In fact, he figures his own business has enough work for the next two years, constructing houses that have already been sold.
“New housing starts could be as much as half of what they were (in 2008),” predicted Giannone, “but next year will see latent demand having a significant impact.”
The demand will be coming from the demographic segment he referred to as the “echo boomers,” children of the baby boom generation who are coming into a position where they will be looking to buy their own homes.
He also pointed out reasons the industry is in better shape during this current economic downturn than it was during the last major recession in the early 1990s.
For one thing, housing starts greatly outpaced the growth of family households in the late 1980s, causing a glut that saw housing starts drop over 60 per cent in the early years of the following decade.
He contrasted that with OHBA studies that predict an additional 30,000 family households in the province by 2006. Giannone said annual starts close to 2008 levels are both feasible and sustainable through to the 2030s.
As well, he said mortgage rates are currently half of what they were in the 1990s, when rates of between 10 and 11 per cent were not uncommon.
“And our banks don’t need bailouts like they do in the United States. They may be more stringent on how they lend money, but they’re still lending money.”
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