From PROFIT magazine, March 2010
Real Estate Housing's comeback

How to cash in on the rebound in new construction.

Residential construction drives so much economic activity that the dizzying drop in housing starts in early 2009 hammered more than just hammer makers. Yet, since then, home building has become a powerful expansionary force as record-low mortgage rates have fueled demand. Canada Mortgage and Housing Corp. estimates that housing starts topped 186,000 in January, up from last April's trough of 118,000. Western Canada led the country, with starts more than doubling.

Total starts remain below the average of 221,000 from 2002 through 2008, says Alex Carrick, Markham, Ont.-based chief economist at Reed Construction Data Canada. Still, says Carrick, "This is an extraordinary comeback, rather than the gradual recovery that was expected." He disagrees with the common view that housing starts will slow once interest rates begin to rise. He figures that potential home buyers, believing that more rate hikes are on the way, will jump in and buy while they can still afford it.

Housing economist Peter Norman of Toronto-based Altus Group calls this "a good, solid housing recovery" but not a boom. He says the rebound is increasing home builders' demand for legal and accounting services, employee health insurance and software for processes such as design and site management. One promising area, says Norman, is to help builders become more productive: "They're looking, for instance, for better ways to design houses and manage inventory, and products to help them reduce waste".