This was a week with a lot of important news coming out: Canada signed the USMCA, which does not mention softwood lumber but does renew the very important Chapter 19 dispute resolution mechanism, the United Steelworkers issued strike notice to northern British Columbia sawmill operators, and the latest news on US home building and sales casts murky light on that important economic driver for the US economy.
A forestry strike would impact Tolko operations in both Quesnel and Williams Lake, as well as the West Fraser planer operation in the Lake City, Dunkley Lumber and other operations in Prince George, Houston, Burns Lake, Fort St. James, Mackenzie and Fort St. John, according to My Cariboo Now Wednesday.
The union representing roughly 2,000 sawmill workers in Northern BC, including Quesnel and Williams Lake, has issued 72-hour strike notice. Brian O’Rourke, the President of the United Steelworkers Local 1-2017, said to My Cariboo Now that decision was made after five days of talks with a mediator broke down September 28.
O’Rourke says despite the strike notice, they are still willing to go back to the bargaining table. Madison’s will provide more updates on this critical development as we get them.
Elsewhere, based on 2017 10K filings in the US, the 2017 top ten publicly-traded builders captured a 25.5% share of new single-family home closings, down from 27.4% in 2016, said the National Association of Home Builders Eye on Housing blog September 26. The 25.5% share in 2017 is out of the 2017 US total of 616,000 new home sales. This count represents a smaller share of the total single-family market when not-for-sale, custom home building is included.
The number of starts of homes built on an owner’s land, with either the owner or a builder acting as the general contractor, tallied 172,000 in 2017.
As well, now that US mortgage rates have reached a 5% rate, many pundits are providing insight on what that will mean for US home building activity.
According to Reuters Monday, the US housing market, already struggling with tight inventory and rising building costs, faces a fresh headwind as 30-year mortgage rates rise close to the 5 percent threshold for the first time in years. The rise in mortgage rates so far this year means a potential homebuyer would pay about US$35,000 more interest on a US$220,000 loan over 30 years.
In a strange twist, the impact of which on US home building remains to be seen, foreclosed homes are appreciating faster than the typical US home, said Zillow Thursday. Apparently, “Foreclosed homes aren’t as good a deal as they once were.”