News » Builders Get Ready to Heal Cuts and Bruises
Far from waving the white flag of surrender, Calgary's housebuilding industry will start regrouping in preparation for the inevitable turnaround in industry fortunes.
At least that's the way Cal Wenzel, president and founder of Shane Homes, envisions things shaking out for an industry he's been involved with for nearly 30 years.
"In the short term, we'll take some time to sit back and accept what has happened this year," he was saying at the recent 30th anniversary celebrations for Canyon Plumbing and Heating Ltd. "Then we'll get on with making things better."
But that part about making things better?
It's not going to happen overnight -- how about another two years before full health has returned to the industry's single-family sector?
Meantime, the industry must heal the cuts and bruises doled out by the current housing market, competition from the high-powered resale home industry, and some politicians.
Wenzel is critical of NDP leader Jack Layton and lameduck Liberal leader Stephane Dion for their negativity regarding the economy of this country, slamming them for their "sky is falling" attitude.
"It doesn't do anybody any good," says Wenzel. "When you scare the crap out of people, they're going to react. Now, consumers have a real bad case of the jitters when it comes to confidence."
He says there is absolutely nothing wrong with the Calgary economy. Oil prices are down, but they're just back to where they were a year or so ago.
Although migration of people to the city is lower, it is still happening. The jobless rate is still the lowest in the country and retail activity hasn't succumbed.
While the dollar's down, honestly, how long did anyone think it would continue parity with the U.S. greenback?
This is Calgary, after all. Economic ups and downs are part of living here.
The downturn has been an educational tool for the housing industry.
Wenzel says the road to recovery will be about the industry taking to heart lessons that have been learned the hard way over the past year or so.
"We should never have been where we were in '05, '06 or into '07," he says. "We sold too many homes to too many investors -- without knowing it in most cases -- some of whom made a hundred thousand dollars by flipping them."
Too late, in many cases, builders eventually put measures in place to try to eliminate speculators purchasing new homes.
The inventory of resale homes listed on the Calgary Real Estate Board's MLS system -- one of the new home industry's major bugbears -- is declining, but there is still a long way to go before balance returns to the marketplace.
Because of the cautious, hesitant attitude of consumers, and the resale inventory, Wenzel expects to see only 3,500 new home sales in 2009 -- a far cry from what was occurring until midway through last year.
He says the new normal for the industry could be something like 5,000 to 6,000 deals in a year.
"In about a year or 18 months, everything will be OK," he says. "We'll be able to say: 'Remember 2007 and 2008? It wasn't a good time for the industry'."
But until that time, builders are reining in construction, trimming their spec homes and generally learning how to operate a business successfully in a down time. Spec homes are built in advance for buyers who want to take immediate possession of their houses, rather than order them and then wait for them to be constructed.
"We're holding our prices, but we also have to remain competitive," says Wenzel.
Hope, M. (2008, November 1). Builders get ready to heal cuts and bruises. The Calgary Herald, p.17. © The Calgary Herald 2008