Marty Hope, Calgary Herald
Published: Saturday, December 26, 2009 

Now that the jolly old guy is back at home sleeping off his around-the-world-in-one-night gig -- and the turkey leftovers are being readied for sandwiches while the newest toy is being played with -- there is time for homebuilders and consumers to reflect on 2009.

Frustrating? Got that right. Baffling? To say the least.

At the start of the year, there seemed to be a whole ton of doom and gloom -- a hangover from 2008 when work started on just 4,387 single-detached homes.

Builders were told the news wouldn't get any better by the end of the year, with Canada Mortgage and Housing Corp. initially estimating that housing construction starts would total 4,200 for the year.

Challenges faced by builders included staff layoffs, price reductions, hesitant consumers, a standing inventory of quick-possession homes to sell -- and all this while trying to keep their corporate heads above water.

Consumers had gone to the sidelines, seemingly refusing to pay the prices builders and resale home sellers wanted.

They were waiting for prices to decline and they stayed away from the market, despite the fact mortgage rates were at historically low levels -- among the cheapest they had been in 50 years.

At least in the early stages of the year, consumers seemed to ignore builder and government carrots dangled in front of them.

One builder once told me that one day in July 2007, the market just shut down. Sales stopped, show homes went quiet and tradespeople found themselves with much less to do.

Well, the restart was just as sudden. From what I can gather, things started to improve in March or April 2009.

Maybe it was because it was spring, or because word leaked out that the economy was doing better than everybody had thought.

Maybe consumers had twigged onto the fact prices weren't going any lower, or maybe it was just that good old, go-getter attitude of Calgarians.

Whatever it was, buyers jumped back into the game with a vengeance.

Oh, and that forecast of 4,200 construction starts for detached homes? That was eclipsed by the end of November, when CMHC announced housing construction starts had soared to 4,216.

It's quite likely that builders will even surpass the year-end total for 2008.

What's interesting about beating the 2009 forecast is that some builders are still saying the economic downturn isn't entirely a thing of the past.

The worst may be behind us, but there are still some lingering issues before it can definitely be put to bed.

"It's still fragile out there," says Cal Wenzel, president of Shane Homes. "We have to be careful how we respond to what has been happening."

In the 30 years he's been in the business, he's seen plenty of ups and downs in the economy -- and in the resulting fortunes of the housebuilding industry.

He knows consumers can be fickle; that one mistake at the wrong time could stall the recovery.

"Consumers are relatively confident of the future," Wenzel was saying from the great room of a show home in Sage Hill.

That being said, homebuyers want to see some bang for their buck. It's all about value and quality.

While builders want to see some price increases so they can add a bit to their profit margins -- which have taken a beating through the downturn -- Wenzel says caution is essential.

A 10-per-cent hike is probably the most consumers will accept.

"We're not at the point where we can say: 'Build it and they will come.' That's still a long way down the road yet," says Wenzel.

The market improvement continued as 2009 progressed. It has gotten to the point where work started on 604 detached homes in November, making it the second busiest month of the year -- only slightly behind September's 616 starts.

How bad was it earlier in the year? Well, it wasn't until July that monthly housing construction starts climbed over 500.

Wenzel says consumers were unsure what was happening with the economy early in 2009, so they weren't about to go out and spend big money on anything, including a home.

"When people get scared, it takes 120 to 150 days to get over it," he says. "It's like that every time."

Maybe now that consumers are more comfortable with where everything is going, 2010 will be a better year than first forecast.

CMHC has initially predicted 4,900 starts for the year ahead. Maybe, as is CMHC's wont, it is being conservative.