![\"toronto-condo-construction\"](\"https:\/\/www.livabl.com\/articles\/wp-content\/uploads\/2020\/01\/toronto-condo-construction.jpg\")
<\/a><\/p>\nPhoto: James Bombales<\/em><\/p>\n The Canadian housing market entered the new year showing \u201crenewed dynamism\u201d after gliding in for a soft landing following a long boom. But according to research firm Oxford Economics, the heat once again emanating from the market isn\u2019t enough to reach full-on housing boom territory.<\/p>\n The firm, which published a research note this month titled, \u201cA housing rebound is underway, but a new boom is unlikely,\u201d acknowledged that the indicators for the Canadian housing market are strong. Sales are climbing again in all major markets while supply is struggling to keep pace, leading to growing momentum on the pricing side and seller\u2019s markets nearly across the board.<\/p>\n\n But, economists Tony Stillo and Michael Davenport wrote in the note that these positive signs don\u2019t mean the market is roaring back to life.<\/p>\n \u201cDespite strong underlying demographics and continuing low lending rates, housing activity is set to improve only modestly in the near term, limited by elevated household debt, excessively high house prices in key metros, and a more slowly growing economy overall,\u201d they wrote.<\/p>\n Persistently high household debt and what the economists view as \u201cvastly overvalued\u201d homes in the key markets of Toronto and Vancouver are the major \u201cdownside risks\u201d they see as threatening to weigh down the market, especially if interest rates begin to rise sharply or the labour market takes a hit.<\/p>\n Stillo and Davenport are particularly concerned about affordability in Toronto and Vancouver and these \u201covervalued\u201d markets\u2019 potential to upend a stabilizing national housing market.<\/p>\n \u201cBased on households\u2019 borrowing capacity and a 10% down payment, we estimate the price for an average home is about 34% higher than the median-income household can afford in Greater Toronto and a staggering 68% out of reach in Greater Vancouver,\u201d they wrote.<\/p>\n While the federal Liberal government has continued its push to expand the First-Time Home Buyer Incentive program it introduced prior to the fall 2019 election as a way to address affordability challenges in these markets, the Oxford economists aren\u2019t sold on the effectiveness of the plan.<\/p>\n \u201cNew measures promised by the federal government to address affordability will likely have opposing effects on home prices. A boost to the qualifying value for the first-time homebuyer program in highly-priced markets would increase demand and add to price pressures,\u201d they wrote. <\/p>\n But as the economists are careful to caution that the risks to the market could push it back into more volatile territory, overall they\u2019re reasonably confident that the fundamentals \u2014 high immigration, job growth and low interest rates \u2014 will keep housing on stable footing for 2020.<\/p>\n The heat once again emanating from the market isn\u2019t enough to reach full-on housing boom territory.<\/p>\n","protected":false},"author":5,"featured_media":199266,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","apple_news_api_created_at":"2020-01-23T14:46:29Z","apple_news_api_id":"777f5110-b4fa-4974-9cbd-525793a1442c","apple_news_api_modified_at":"2020-01-23T14:46:30Z","apple_news_api_revision":"AAAAAAAAAAD\/\/\/\/\/\/\/\/\/\/w==","apple_news_api_share_url":"https:\/\/apple.news\/Ad39RELT6SXScvVJXk6FELA","apple_news_coverimage":0,"apple_news_coverimage_caption":"","apple_news_is_hidden":false,"apple_news_is_paid":false,"apple_news_is_preview":false,"apple_news_is_sponsored":false,"apple_news_maturity_rating":"","apple_news_metadata":"\"\"","apple_news_pullquote":"","apple_news_pullquote_position":"middle","apple_news_slug":"","apple_news_sections":["https:\/\/u48r14.digitalhub.com\/sections\/09b86915-7d2b-3acd-915b-b215002d01b7"],"apple_news_suppress_video_url":false,"apple_news_use_image_component":false,"footnotes":""},"categories":[11269],"tags":[],"coauthors":[8652],"apple_news_notices":[],"yoast_head":"\n