[SteelTown]

Expect housing market to cool in '09

November 14, 2008
Lisa Grace Marr
The Hamilton Spectator

The boom the housing industry has enjoyed for the past two years is about to moderate, slipping below 200,000 housing starts in 2009, for the first time in years.

Still, high employment, rising incomes and low mortgage rates have provided a steady foundation for the industry nationally, said Bob Dugan, chief economist for Canada Mortgage and Housing Corporation (CMHC).

CMHC staff provided an industry outlook at the Hamilton Convention Centre yesterday.

Sarah Fong, CMHC analyst for the Hamilton region, said this market is more resilient than some because of its ability to evolve from a goods-based economy to a service-based one, maintaining jobs.

Fong said Hamilton and Burlington still benefit from being near Toronto and other hubs in southwestern Ontario for those wanting to "get jobs where the money is .... and live where it's cheap."

Fong analyzed the impact of higher gas prices on commuting and said gas would need to reach about $2 a litre before cost savings would not be realized by living in Hamilton.

However, she said Hamilton and the rest of the province will experience slowing job growth, which will affect first-time home buyers' confidence.

That plus only a slight increase in housing prices paints a picture of an industry in slow mode.

Ashot Karapetyan, market analyst for CMHC, offered a glimpse of the market beyond 2009 and said retiring baby boomers who are downsizing will boost the demand for apartment-style housing.

Migrants will also play a major role as they are expected to provide three-quarters of projected population growth.