Scotiabank, TD and RBC each released market briefs this week to accompany the Canadian Real Estate Association’s (CREA) September 2013 home sales and price data.
September saw home sales increase a modest 0.8 per cent over August and 18.2 per cent year-over-year. The average national sales price also increased year-over-year by 8.8 per cent and now sits at $385,906.
In her analysis, Scotiabank economist Adrienne Warren wrote that buyers continued to take advantage of low borrowing costs, “though recent increases in fixed mortgage rates are expected to slow the housing market’s momentum later this year and into 2014.”
Diana Petramala, an economist at TD, was on the same page, writing that the recent increase in five year mortgage rates that began in June 2013 “will likely temper housing activity in the coming months.”
“In large part, some of the strength experienced over the summer months can likely be attributed to households jumping into the market to get ahead of interest rate increases and we anticipate some payback in the coming months,” she wrote.
RBC Economics attributed the market’s strength in recent months to “the unwinding of earlier restraint associated with the tightening of mortgage insurance rules last year and, in August, a likely rush to lock-in lower mortgage rates.”
The bank has forecast that 2013 home resales will be unchanged from 2012 and resale activity will “remain largely static overall in 2014.”
The one-two punch of flattening demand and supply of newly completed condo units in 2014 will bring price increases “to a standstill,” the RBC report’s authors wrote.
While Robert Kavcic, BMO’s Senior Economist, did not make any explicit predictions for market activity in 2014 in his econoFACTS brief, he did note that “softer activity through the fall should keep price growth in check.” He also dismissed concerns of a steep market correction, calling any worry about a hard landing for Canadian housing “a faint memory.”
TD is planning to publish a more thorough housing market outlook report in the next week, so stay tuned for more forward-looking analysis.
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