Why are home prices so high and when will they fall?
Not in a million years …
Rosenberg on real estate
Like many other economists, David Rosenberg wonders today what happened to a housing bust some observers had predicted.
âAs if to purposely defy the Canadian economy, banking and loonie bears, home resale activity rose 2.8 per cent sequentially in August and over 11 per cent on a year-over-year basis,â the chief economist at Gluskin Sheff + Associates said in a research note today.
He was referring to August sales numbers released yesterday by the Canadian Real Estate Association, which, as The Globe and Mailâs Tara Perkins reports, showed a rebound from a government-induced slump a year earlier.
Thatâs when Finance Minister Jim Flaherty tightened mortgage rules to cool down the market and head off a bubble.
Now, homebuyers appear to be rushing to beat higher mortgage rates, boosting home sales across the country.
âThe national sales/listing ratio moved up to 54.6 from 51 in July, reflecting a tighter balance to the housing market, and, as such, prices rose 8.1 per cent on a year-over-year basis, the fastest pace in over two years,â Mr. Rosenberg said.
âSo much for the housing bust.â
Mr. Rosenberg is not alone.
Chief economist Douglas Porter of BMO Nesbitt Burns, for example, noted that house prices keep âquietly churningâ forward, though last monthâs national average was skewed by the countryâs most expensive cities.
âSuffice it to say that next to no one predicted a big mid-year bounce in home sales at the start of 2013, when calls for Canadian housing market calamity were all the rage,â he said after yesterdayâs numbers were released.
âContrary to the Greek chorus of woe, sales are now above their 10-year average in seasonally adjusted terms,â he added.
âAnd, the year-ago comparisons will remain quite easy for the next eight months, so settle in for a spell of potentially solid year-over-year figures even if sales do simmer down notably in coming months.â
Most economists donât fear a burst bubble.
Diana Petramala of Toronto-Dominion bank noted that sales remain 11 per cent below the 2009 peak, and that increases in longer-term mortgage rates will probably âkeep housing demand in check.â
Read More on http://www.theglobeandmail.com/
- Tara Perkins: CREA hikes forecast after jump in home prices
- Tara Perkins: Mortgage fears drive up Canadian home sales
- Canada’s housing market among most ‘bubbly’ in world, Economist finds
- One-quarter of Canadian families spend more than they should on housing
- Characteristics of condo dwellers: Younger, older and not as wealthy
- Sean Silcoff in ROB Insight (for subscribers): If rising rates don’t cool housing, Flaherty may have to
- David Parkinson in Economy Lab: Immigration boosting housing sector: report
- Tara Perkins: Regulator eyes tighter mortgage rules
- Canadian homes among most overvalued in OECD ranking
- OECD chief on Canadian housing: Itâs not a bubble (just way overvalued)
Whaddaya Say?