Photo: James Bombales
For months now, economists have been saying that the Canadian real estate market is heading towards a “soft landing,” as higher interest rates and new mortgage rules coax prices down from record highs. But could they have been overly optimistic?
This, and plenty of other questions remain about where the market is headed in the next few months. In order to make help sense of things, BuzzBuzzNews has rounded up the latest takes of the industry’s most prominent experts.
Things are still looking a little vulnerable
While new mortgage rules are intended to keep the market steady (and avoid a dreaded crash), the Canada Mortgage and Housing Corporation believes that there is still some cause for concern.
“Our market assessment continues to show a high degree of vulnerability for the housing market at the overall national level, because of the combination of price acceleration and overvaluation,” write CMHC chief economist Bob Dugan, in a recent statement.
Dugan argues that both the Ontario and BC markets remain highly overvalued, leaving the national housing market at risk of a crash.
“While house price growth has slowed, house price levels remain high relative to underlying economic fundamentals such as income and population growth [in Toronto,]” writes CMHC Toronto principal market analyst Dana Senagama, in a statement.
But the market isn’t “knocked out” just yet
Still, many economists feel that the market will adjust to the effects of new regulation, and continue to push ahead without much trouble.
“[Recent policy changes] merely supply body blows to the housing market, and will not knock-down the market,” write TD economists Michael Dolega and Rishi Sondhi, in a recent note. “Indeed, after some weaknesses this year and into early-2019, nationwide activity looks to stabilize.”
The pair predict that 2018 will be bring falling sales and flat prices, as the market continues to stabilize.
“We remain of the view that weakness will manifest as a continuation of the soft landing that has been taking place in Canada’s housing market recently,” they write.
Things might be looking up (at least for Quebec)
The outlier for 2018 may end up being Quebec. According to a recent report from Desjardins, the province has the economic fundamentals for a record year in real estate.
“The extremely favourable economic backdrop for Quebec consumers is fueling this surge in Quebec’s residential sector,” reads the report. The province created nearly 70,000 jobs in 2017, a number economists predict will rise in 2018.
Adding to the rosy outlook? Housing starts jumped significantly in 2017.
“Housing starts soared by almost 20 per cent last year, the sharpest increase since early 2010,” reads the report.