Bank of Canada would cut interest rates<\/a> following a major downturn in the housing market. That prediction ran contrary to the analysis of many other economists and ultimately did not come to fruition, with the central bank choosing instead to hike rates twice that year. A simple Google search of Madani will also turn up many other widely shared predictions of imminent Canadian housing market collapse. It all never really came to pass and while the market has seen some volatility since 2017, it has never truly crashed.<\/p>\nSo when a bearish, contrarian firm like Capital Economics is impressed by the performance of Canada\u2019s housing market, it\u2019s definitely worth paying attention to the reasons for its optimism.<\/p>\n
In a recent note distributed to Capital Economics\u2019 clients, the firm\u2019s chief North American economist Paul Ashworth made a number of glowing comments about the strength of the market after reviewing Teranet and National Bank\u2019s latest monthly home price data release.<\/p>\n
Ottawa and Montreal are \u201con fire\u201d while Toronto just posted its strongest price gain of the year. Even Vancouver, which has endured some brutal months over the last year, enjoyed a price rebound in September, he writes.<\/p>\n
At the national level, home prices saw a 0.1 percent increase between August and September. While that figure probably seems fairly lacklustre to you, Ashworth writes that when adjusted for seasonality, the September increase is actually the strongest monthly bump since January.<\/p>\n
And a quick note for those who didn\u2019t follow that: Real estate markets have strong seasons and slow seasons so just looking at one month\u2019s performance won\u2019t always give you a complete picture of the market\u2019s overall health. That\u2019s why it\u2019s helpful for economists to adjust monthly housing figures for seasonality.<\/p>\n
Looking ahead into the near future, markets across Canada should continue to rally into the first half of 2020 thanks to the strong rebound in home sales, Ashworth continues.<\/p>\n
There will be more detailed analyses of what the 2020 housing market holds as we race toward the New Year (seriously folks, there are holiday decorations up in the stores already). If Ashworth\u2019s unusual optimism is any indication, many other market commentators will be coming out of the woodwork soon to add their upbeat takes to the 2020 predictions pile.<\/p>\n
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