The chief economist of one of Canada’s biggest banks is taking aim at reports of a possible Canadian housing market slowdown.
“All we will say is that the slowdown is keeping itself very well disguised,” quips Douglas Porter, BMO’s chief economist, in a research note published this morning.
Titled “Canadian Housing Slowdown??? Don’t think so…”, the note references articles published this week that highlight a recent cooling of Toronto and Vancouver home sales and tightening conditions that limit sales activity in the two cities.
However, addressing items like these, Porter, the BMO economist, counters with the latest data from the Canadian Real Estate Association.
“To recap, national home sales hit an all-time high in April in seasonally adjusted terms,” he writes. Unadjusted sales make for the second-busiest sales month of all time, outpaced only by May 2007, Porter notes.
A number of outlets from CTV News and the Globe and Mail to BuzzBuzzHome News recently picked up on a TD report, “Moving On The Monopoly Board: Buyer Gridlock In The Toronto And Vancouver Housing Markets.”
The report outlines a scenario in which high prices in Toronto and Vancouver stop current homeowners from trading up, which chips away at the number of starter homes available to first-time buyers.
“This reduces churn in the market, elevating prices and scaling back the selection of choices,” writes TD economist Beata Caranci in that report. One could argue this weighs on sales activity.
That same day, the Financial Post ran with an article headlined “After long boom, Canada’s housing shows some signs of cooling as high prices create ‘a vicious circle.’”
It didn’t directly reference TD’s report, but instead it quoted Jason Mercer, Toronto Real Estate Board’s market analysis director, who noted the same issue in different terms.
“It’s a vicious circle,” he tells the Financial Post. “As people consider selling, it might be very difficult to find a home to meet their needs,” Mercer adds.
But as Porter notes, sales activity continues to reach new heights. “The past year has seen 525,000 sales, the most ever,” says Porter, mentioning double-digit year-over-year nationwide sales growth. “That’s even before bringing prices into the equation.”
The average sale price of a home in Canada was up 13.1 per cent in April, compared to the same month last year.
“If that’s what passes for a slower market, or gridlock, or whatever one wants to call it, it’s frightening to imagine what fast-moving traffic would look like,” he concludes.