Photo: James Bombales
As summer comes to a close, the Canadian housing market seems to be on track for a warmer fall.
After months of slumping activity, sales and prices were up month-over-month in June and July, in what many economists are interpreting as a comeback for the market, after a slow start to the year.
But what specifically should industry watchers be looking out for heading into September? Livabl house rounded up the latest expert commentary, to give you a better sense of what factors could affect the market next month.
Real estate investment is on the rise
The Canadian economy expanded by 2.9 per cent in Q2, as the housing market finally adjusted to the effects of a new mortgage stress test.
Real estate investment had dropped 2.7 per cent year-over-year in Q1, but a boost in national home sales led to a 0.3 per cent year-over-year increase in Q2.
According to TD senior economist Brian DePratto, it’s a trend that’s likely to continue heading into the fall.
“Looking ahead, a more ‘normal’ pace of growth should prevail,” he wrote, in a recent note. “Housing activity seems to have bottomed, and so we expect residential investment to continue making a positive contribution, counterbalanced by disruptions in the energy sector.”
A rate hike is on its way
Higher interest rates lead to higher mortgage payments for Canadian homeowners, and could affect home sale activity. And, according to a recent note from Capital Economics senior Canada economist Stephen Brown, the Bank of Canada will likely hike the overnight rate again this fall.
“Even if NAFTA negotiations are concluded successfully this week, the Bank of Canada is likely to wait until October before it raises interest rates,” writes Brown.
The Bank hiked the rate to 1.50 per cent in July, and is widely expected to do so again before the end of the year.
Pricey markets could cause residents to relocate
This week, a new poll from the Angus Reid Institute found that 38 per cent of Toronto homeowners are seriously considering moving out of the city, as housing affordability continues to deteriorate.
According to Zoocasa managing editor Penelope Graham, there’s a pretty good chance that younger Toronto residents might consider moving into other Ontario markets, that are a little less pricey.
“We can’t really say definitively if these particular homeowners are likely to move out of the city, but persistently high condo prices in the city core could motivate current homeowners to cash in and put their equity towards larger properties that are closer to their place of work,” she told Livabl earlier this week.