Looking back at how 2009 treated the new home building industry in Calgary, Bill Bobyk, of the Sterling Group of Companies, summed it up very well, saying “Nobody could have predicted how this year turned out.”

At this time last year, predictions for the health of the industry were dire, but about the time spring arrived, the market blossomed, growing ever stronger through the summer and fall.

Three key factors were at play: Pent-up demand from buyers who disappeared when the economy went into freefall; lower prices, and; the most important of all, the lowest mortgage rates in decades.

The significance of the rates cannot be understated — they pulled the home building industry in Calgary, and across the country, out of the recession, building a foundation for an economic recovery expected to start showing itself next year.

People who had planned to buy, prior to the economic meltdown, renewed their intentions, which they may have done regardless of the rates, but there is no question attractive mortgages, coupled with lower prices and builder incentives, pulled a large group of first-time buyers into homeownership.

Many of these buyers had their homeownership dreams turn to nightmares when the Calgary market exploded in late 2005 and overheated through to mid-2007, during which time demand outstripped supply and prices went through the roof as labour and material costs increased.

Estimates are first-time buyers — no doubt encouraged and supported by parents/grandparents who remember mortgages rate as high as 20% — were responsible for 30% to 35% of sales this year, which bodes very well for the future of the home building industry and for Calgary.

More homeowners means more tax payers contributing to city coffers, more people spending money on necessities and accessories for their homes and more people building equity in their homes, which eventually will lead them to buy a new move-up home.

Sales in the first four months of 2009 were the lowest in 10 years and, while this year won’t go into the record book for sales, the rebound since April because of the rates has us already ahead of last year’s pace.

But, like all good things, the low rates will not last forever, with most financial experts predicting a slow but steady increase beginning at the end of the second quarter or beginning of the third next year.

In recent weeks, Bank of Canada Governor Mark Carney, while saying the Bank intends to hold its position of keeping the key overnight rate at 0.25% until at least June, also said he has concerns about Canadian housing markets overheating and will raise rates sooner, if needed, to cool things off.

Ironically, the announcement could in fact create what the Bank fears the most — an overheated housing market as buyers get into the market before rate increases.

What do builders think 2010 will bring?