Positive U.S. housing market could indicate great things for Canada

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In a recent article, we addressed the fact that analysts and mortgage pros are a bit concerned by the state of Canada's housing market and likened it to a "slow-motion version of what happened in the U.S." Remember that?

The good news for Americans is that the U.S. housing market is improving – maybe not by leaps and bounds, vast improvements nonetheless. The even better news is that U.S. housing market gains can be a really great thing for the Canadian economy and even stimulate economic growth in many different ways.

According to a recent article in the Winnipeg Free Press, the increased American housing activity and positive change for U.S. homeowners and prospective buyers marks the possible end of the four-year recession and plenty of economic woes. Unemployment rates are still soaring and improving at a snail's pace – if that. However, economic recovery is on the horizon, despite its recovery rate hovering near 1.7 percent annually.

Houses are increasing in value! New homes are being built! That has to mean something, right?

Sure it does. Canadian business owners and residents who work with or sell products to Americans will likely note sales gains as a result, which will then funnel into Canada's economy and potentially reverse all the negative predictions those industry analysts have given.

How American housing affects Canadian residents
Actually, the increasing number of home starts in America has a major impact on Canadians and a key industry: Lumber and wood product manufacturing. According to CBC News, America's improving housing market is actually spurring a rebound for New Brunswick wood products manufacturers. The province reportedly exports 80 percent of its finished wood products to America, and similar companies are preparing themselves for a business boom.

"We've had seven years of poor markets," David Palmer, manager of the York Sunbury Charlotte Forest Products Marketing Board, told CBC. "We purchased [the old M.L. Wilkins and Son Ltd. Sawmill] four years ago, and all during that time period, the markets have been too low to really run the mill profitably. It's only been in the last six to 12 months or so that the prices have come back enough to make it feasible to operate the mill."

Mark Arsenault, president of the New Brunswick Forest Products Association, says that as long as other countries and the U.S. continue buying lumber, wood fibre, wood cabinetry, doors and windows from Canadian companies, Canada and its residents will benefit from the business. The upswing in product demand may even play a small role in increasing employment numbers for Canadian manufacturing plants.

Will this have any effect on the Canadian housing market?
It's a good question, especially because many experts believe that any small shift or downswing in Canada's economy could effectively burst what many believe is a precarious housing industry bubble. However, despite the fragility of the Canadian market thanks to the low interest rates, high home prices and seemingly out-of-control household debt, the American housing market isn't likely to have any effect on Canada's housing market in regard to supply and average home cost.

However, this should not lessen what is really great news for our country – America is the largest consumer of Canadian exports, and prices of exported commodities are expected to continue increasing with time. Not only will this give residents more resources to buy a home, invest in property, save for a rainy day and pay down their increasing debt, but do their part in strengthening the Canadian economy, one Loonie at a time.

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