Photo: James Bombales
Economists are rolling out their 2019 forecasts for the Canadian housing market, and one in particular doesn’t have high hopes for where the market is headed in the new year.
According to Benjamin Tal, deputy chief economist at CIBC, there could be plenty of good news in store for the Canadian economy in 2019 — but the housing market won’t be part of it.
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“A lot of good things can happen,” he writes, in his most recent note. “Maybe the pipeline issue will be resolved, maybe business investment will pick up dramatically, maybe the US and China will become friends again, and maybe the housing market will turn a corner and….maybe pigs will fly.”
While some industry watchers had written that the housing market might be stabilizing earlier this fall, a particularly rough set of November activity numbers has Tal saying that the market still has a long way to go before it returns to its status as a boon to the Canadian economy.
“With home sales in Toronto and Vancouver falling by 15 and 43 percent year-over-year respectively in November, the housing market is far from ‘stabilizing’ as the Bank of Canada is suggesting,” he writes. “In fact, we are in the midst of an adjustment in both markets with the high-rise segment of the market the next shoe to fall.”
While the relatively more affordable condo market has so far managed to continue posting month-over-month increases in sales and prices, the low-rise segment in both of these major cities has been struggling all year.
All told, both Tal and his colleague Royce Mendes believe that the housing market will continue to dampen the Canadian economy in 2019.
“We still believe that housing will be a drag on GDP next year, contrary to the Bank of Canada’s last set of projections,” writes Mendes in his most recent note. “Another soft print would reinforce our revised forecast that a pause in rates over the next few months looks likely.”