Canada’s impending housing collapse not in sight
Canadian Real Estate Rallies
Canadian Realtors’ Group Gives More Upbeat Housing-Market Forecast
Canadian real estate industry says 2013 sales off to better start than expected
Canada’s housing market continues to show signs of stability as the number of homes sold so far this year has come in slightly higher than projected, a possible signal that the market is set for a rebound in 2014, according to the Canadian Real Estate Association.
Canadian house prices holding firm
The industry group representing Canadian realtors reported Monday that although it still expects fewer sales to be logged this year than in 2012, the decline will be smaller than what was predicted in March.
Overall, it forecasts that there will be more sales next year than in 2013 and 2012.
Canada’s housing market surprising healthy, real estate rep says
Canadian Real Estate Association forecasts there will be more sales next year than in 2013 and 2012
The number of Canadian homes sold so far this year is slightly higher than projected and it looks as if 2014 will show a rebound, according to a new forecast by the Canadian real estate industry’s main association.
The Canadian Real Estate Association said Monday it still expects fewer sales this year than in 2012 but says the decline will be smaller than what was predicted in March. It also projected that next year will show more sales than in 2013 or 2012.
CREA is now estimating 443,400 units will be sold in 2013, a decline of 2.5 per cent from 454,573 in 2012. It had previously projected a decline of 2.9 per cent from 2012.
CREA says the sales activity began to pick up at the end of the first quarter and accelerated in the second quarter.
The association also says 2014 will see a strong rebound, with 464,300 units of housing sold — about 9,700 more than last year.
The number of transactions dropped off in the second half of 2012 after new mortgage rules for lenders and buyers were introduced by the federal government last summer.
CREA reported there were 51,764 residential properties of all types sold across Canada last month, down 2.6 per cent from May 2012.
On a month-to-month basis, May showed a 3.6 per cent increase from April with 37,792 units and 36,473 units sold on a seasonally adjusted basis in the first two months of the second quarter.
Ths association’s home price index was up 2.3 per cent in May, compared with a year earlier. That was slightly better than April’s HPI of 2.2 per cent but still near two-year lows.
The May national average price, for all types of property in major markets across Canada, was $388,910 — up 3.7 per cent from a year earlier. Almost all of the local markets that make up the average saw year-to-year increases.
Property sales in Canada stable and prices set to rise
Could Canada be on course for a soft landing?
With the Canadian Real Estate Association (CREA) hiking its forecast for home sales and prices, economists say calls for a “hard landing” in Canada’s housing market are increasingly looking off the mark.
The association, which represents realtors across the country, reported on Monday a 3.6-percent jump in May homes sales from April, the largest month-over-month increase in nearly two years. Yet home sales are still 2.6 percent lower than they were a year ago.
This has prompted CREA to ratchet up its 2013 sales estimates to 443,400 homes, still 2.5 percent lower than its last year’s estimate.
TD economist Dina Ignjatovic says the latest data is more evidence that the Canadian real estate market is not headed for a hard landing, where home values would fall dramatically.
“It just goes to show our expectations for the impact of the mortgage insurance tightening rules are starting to wane,” she says. “We do see a stabilization in home sales going forward, but overall still a soft landing in the Canadian housing market [meaning] we aren’t expecting to see a huge correction in sales or prices.”
So far prices in most markets have yet to fall, says Ignjatovic predicting “a fairly stable hosing market over the next 12-8 months.”
BMO chief economist adds that the housing crash, which some commentators have been predicting for years, may simply not happen.
“Sorry to inform you, but ‘The Great Real Estate Crash of 2011…no…2012…no…2013’ has been postponed until 2014, or until further notice,” he says in a note to clients. “More seriously, we believe housing remains on track for a fabled soft landing.”
However, Canada’s hottest sectors, especially the condo market in Toronto and Vancouver, have been the target of particular concern, as they have experienced the largest run-up in prices and a surge in construction.
“There’s, of course, a lot more risk to these markets,” Ignjatovic says. “We do expect to see larger price declines in these markets, but not sharp contractions.”
Canada’s housing market has been a large driver of economic growth in the wake of the financial crisis – in sharp contrast to other developed economies such as the United States where plunging home prices and a sharp pullback in construction weighed on the economy.
“Construction does contribute to our GDP,” Ignjatovic says. “This year, unfortunately, we’re going to see a pullback in housing starts numbers and that will weigh on overall economic growth of Canada, but that’s because we’ve seen such a big shoot up in building, above the demographic fundamentals of Canada.”
Ignjatovic doesn’t expect the federal government to push new mortgage tightening initiatives to keep the market in check.
“From the numbers we’ve seen in the housing market, the government is happy with where things are,” she says. “We’ve seen price growth declined about 2 percent, which is more in line with income growth [so] unless we see a lot of froth building in the market, we probably won’t see too much [government] action.”
Last summer Ottawa put in place tougher mortgage rules in order to slow the country’s booming housing market. Finance Minister Jim Flaherty highlighted the condo market in Toronto as a particular area where real estate had become overheated.
Banks started raising longer-term mortgage interest rates last month, a move that may further slow the housing market.
Answer: Insane people usually do not recover overnight.