By JAY BRYAN, The Montreal Gazette November 9, 2010
Mortgage debt in Canada climbed by 7.6 per cent in the past year to exceed $1 trillion -a figure that's sure to spark new worries about a housing bubble in Canada.
But a look below the surface of this number is far more reassuring.
First, the sheer amount of mortgage debt sounds daunting, but what's really important is how fast it's growing. It turns out that this growth has slowed a good deal from a trend rate of 10.7 per cent in recent years, an encouraging sign. The forecast is for a further downshift.
As well, it's hard to find signs of bubble behaviour or of a financial squeeze on homeowners.
Few Canadian homeowners are speculating on housing and most have a fat equity cushion in their properties. Better yet, most could afford monthly payments of at least $300 above their current ones, according to a new survey.
This information is courtesy of an outfit that represents many of Canada's mortgage brokers and insurers, the Canadian Association of Accredited Mortgage Professionals, which has just published a wealth of housing-market intelligence in its annual report.
Bottom line, CAAMP president Jim Murphy says in a statement accompanying the report: "Canadians are being smart and responsible with their mortgages. They are building equity in their homes and making informed, long-term mortgage decisions."
This sounds like one of those motherhood statements that you expect from sales-oriented organizations like your local real-estate board, but the interest of mortgage lenders is quite different, giving Murphy's optimism a bit more credibility.
His members would suffer big losses if there were a big deterioration in people's ability to pay off mortgage debt - a crucial factor that drove the 30-per-cent collapse in U.S. home values over the past several years.
And it's not just CAAMP that's unconvinced about any bubble. At BMO Capital Markets, senior economist Sal Guatieri has just taken another look at Canadian home valuations and concluded that the average price across the country is too high, but not by a lot.
At the peak of the home-buying frenzy late last year, Canadian prices were overvalued by maybe 18 per cent, he estimates, but this has diminished to about 11 per cent as the market cooled and incomes edged up. (His calculation is based on the long-term relationship between prices and personal incomes.)
With prices still richer than incomes would normally support, there's some pressure for further cooling in prices, Guatieri believes, but he doesn't see a drop of more than five per cent.
That's partly because incomes continue to rise, helping to narrow the gap. It's important to remember that Canada's very low mortgage interest rates can support prices above the average level for quite a while, providing time for the slow advance of incomes to do most of the rebalancing.
Will Dunning, the chief economist at CAAMP, has a similar outlook. As demand for housing cools, he expects to see a sharp drop in new housing construction (a forecast that looked exactly right when we saw yesterday's news of a nine-per-cent drop in housing starts last month), but little pressure on resale prices.
Dunning predicts that the average Canadian home price for 2011 will be a modest 3.9 per cent lower than in 2010, simply because of price declines that have already affected some markets.
But this annual average represents past price movements. He thinks the trend in 2011 and 2012 will be one of small price gains, just enough to offset inflation.
That's because the balance between homeowners listing properties for sale and people looking for homes to buy has shifted back toward buyers, but not nearly far enough to kneecap prices. In Dunning's view, the market these days is just about balanced.
Showing posts with label canadian housing market. Show all posts
Showing posts with label canadian housing market. Show all posts
Friday, November 12, 2010
Monday, September 6, 2010
Avoiding the crash
For all the ominous talk of a housing market collapse, the end result could be yet another rebound in pricesby Jason Kirby on Saturday, September 4, 2010 10:20am
PHOTOGRAPH BY SIMON HAYTER
As the housing market stalls, several people who bought pricey Vancouver condos before they were built are suing to get out of the deals. In Toronto, condo sales during the first half of the year fell for the first time since 1994. And at least one homeowner near Halifax just offered to give away his house for free, so long as whomever took it assumed the $395,000 mortgage. Everywhere, tales of real estate woe and miserable sales data have prompted predictions of a crash. James Grant, a prominent U.S. investment newsletter author well known for his bearish outlook on the American economy, has warned house prices here are primed to fall: “The median Canadian house is, in fact, certifiably unaffordable.” Even if prices tumble, though, as happened in 2008—when the economy was also teetering and house prices were at record levels—they could still make another surprising comeback.
No question Canadian prices are outrageously high. As Grant points out, compared to rental rates, home prices in Canada are more than 60 per cent above the historical average. And with home ownership rates and household debt levels higher than they’ve ever been, Scotiabank economist Derek Holt says there’s nowhere for prices to go but down. “This time when we come off the boil, prices are going to stay lower,” he says.
That’s quickly becoming the prevalent view. And another modest eight to 10 per cent correction could occur. But if that happens, there are reasons to expect a repeat rebound, as happened previously when the Teranet-National Bank house price index slipped eight per cent in 2008 and then roared back 18 per cent, reaching an all-time high two months ago. That’s because mortgages remain wildly cheap and, if anything, are getting cheaper. True, the Bank of Canada has raised interest rates twice since June to 0.75 per cent. That only affects homebuyers taking out variable-rate mortgages, though, which currently sit at 2.75 per cent. The fact is, lenders are furiously cutting fixed-rate mortgages. Since May, five-year fixed mortgage rates have fallen to 3.99 per cent from 4.75 per cent, according to Canequity.com.
Another reason house prices rebounded so sharply after the 2008 drop was that there were far more buyers than sellers. As the financial crisis hit in 2008, new home construction slowed while sellers yanked properties off the market, lest they get caught in a downward price spiral. But when the Second Great Depression in Canada turned out to be Just Another Recession, home buyers flocked back to the market before sellers had a chance to react, thus driving up prices. A similar phenomenon could play out again.
But if another rebound occurs, it will likely be triggered by Ottawa. The Harper government has repeatedly intervened to micro-manage the $2.8-trillion housing market. Before the U.S. subprime mortgage crisis hit, Ottawa dramatically loosened mortgage rules, allowing Canada Mortgage and Housing Corporation to insure zero-down, 40-year mortgages. Ottawa reversed course when such loans were shown to be dangerous. But with the recession, Ottawa swung back into action. It offered first-time home-buyer subsidies, allowed Canadians to withdraw more from RRSPs to buy homes, and authorized CMHC to take $75 billion of mortgages off lenders’ hands. Finally, as the market began to overheat in February, Finance Minister Jim Flaherty tightened mortgage lending standards. But Holt says Ottawa may loosen mortgage restrictions once again if the housing market craters. And it seems entirely possible the government will use its clout through CMHC to spur banks to lend and people to buy.
Efforts to halt prices from falling sharply might keep homeowners, and hence millions of voters, happy, but it’s bad economic policy. First-time buyers would be forced to take on even more dangerously large mortgages. At the same time, if the housing market continues to swing up and down, that eventually translates into stagnation—albeit at high levels.
Which is why many believe it’s time to let the housing market pursue its own trajectory—and, given recent data, that would appear to be down. “There’s a strong case to be made for letting the markets follow their natural evolution, and the U.S. offers a good lesson,” says Holt. “Every time they’ve tried to use stimulus to avoid what’s inevitable in the long run, they end up making things worse.”
Monday, August 30, 2010
HST affects housing market
By Marty Hope, Calgary Herald August 28, 2010
The harmonized sales tax recently introduced into British Columbia and Ontario has had an impact, likely short-term, on the resale housing activity in those two provinces, according to an industry survey.
An online survey conducted at the end of July by Royal LePage Real Estate Services shows that residents have misconceptions about how the HST affects real estate transactions.
When respondents were asked to provide examples of comments heard from buyers and sellers regarding the tax and its effect on the housing market, almost half of the comments (46.7 per cent) indicated that confusion about it continues even more than one month after coming into effect.
Among the most common responses to the survey's open-ended questions were that many home buyers incorrectly believe the tax applies to the sale price of resale properties.
About 44 per cent of the 765 realtors polled in Ontario and B.C. said the HST that took effect in both provinces July 1 is having the greatest effect on the cooling residential real estate market, compared to just 28.4 per cent who cited rising interest rates as having the greatest effect.
In all, more than 86 per cent of respondents said the HST is affecting their business somewhat.
"While we predicted that the prospect of rising interest rates would put a damper on the housing market, our agents are finding that the HST is actually having the greater impact on buyer behaviour, at least in the short-term" says Phil Soper, president and chief executive officer of Royal LePage.
The HST applies to the purchase price of a newly-built home, and fees for services and commissions associated with any real estate transaction, but it does not apply to the purchase price of resale homes.
Resale homes comprise the bulk of transactions in the Canadian housing market, and the majority of agents surveyed by Royal LePage indicated that new home sales account for less than 10 per cent of their business.
"We wanted to understand the impact HST has had since it was introduced, and what we found is that there is a need to better educate home buyers and sellers to ensure they understand when the HST is applicable," says Soper.
"According to our realtors in B.C. and Ontario, misconceptions about the HST are having an effect on the market in both provinces."
Nearly one quarter (24.1 per cent) of respondents in the Royal LePage survey say home buyers and sellers have a low level of awareness about how the HST applies to a home sale transaction, while 44 per cent say buyers and sellers are only somewhat aware.
"Realtors are there to help guide buyers and sellers through the often complex negotiation and closing process, so our take-away from this survey is that we need to do more as an industry to educate consumers about the HST," says Soper.
© Copyright (c) The Calgary Herald
The harmonized sales tax recently introduced into British Columbia and Ontario has had an impact, likely short-term, on the resale housing activity in those two provinces, according to an industry survey.
An online survey conducted at the end of July by Royal LePage Real Estate Services shows that residents have misconceptions about how the HST affects real estate transactions.
When respondents were asked to provide examples of comments heard from buyers and sellers regarding the tax and its effect on the housing market, almost half of the comments (46.7 per cent) indicated that confusion about it continues even more than one month after coming into effect.
Among the most common responses to the survey's open-ended questions were that many home buyers incorrectly believe the tax applies to the sale price of resale properties.
About 44 per cent of the 765 realtors polled in Ontario and B.C. said the HST that took effect in both provinces July 1 is having the greatest effect on the cooling residential real estate market, compared to just 28.4 per cent who cited rising interest rates as having the greatest effect.
In all, more than 86 per cent of respondents said the HST is affecting their business somewhat.
"While we predicted that the prospect of rising interest rates would put a damper on the housing market, our agents are finding that the HST is actually having the greater impact on buyer behaviour, at least in the short-term" says Phil Soper, president and chief executive officer of Royal LePage.
The HST applies to the purchase price of a newly-built home, and fees for services and commissions associated with any real estate transaction, but it does not apply to the purchase price of resale homes.
Resale homes comprise the bulk of transactions in the Canadian housing market, and the majority of agents surveyed by Royal LePage indicated that new home sales account for less than 10 per cent of their business.
"We wanted to understand the impact HST has had since it was introduced, and what we found is that there is a need to better educate home buyers and sellers to ensure they understand when the HST is applicable," says Soper.
"According to our realtors in B.C. and Ontario, misconceptions about the HST are having an effect on the market in both provinces."
Nearly one quarter (24.1 per cent) of respondents in the Royal LePage survey say home buyers and sellers have a low level of awareness about how the HST applies to a home sale transaction, while 44 per cent say buyers and sellers are only somewhat aware.
"Realtors are there to help guide buyers and sellers through the often complex negotiation and closing process, so our take-away from this survey is that we need to do more as an industry to educate consumers about the HST," says Soper.
© Copyright (c) The Calgary Herald
Thursday, August 26, 2010
Living Under a Rock? ABC, NBC Dumbfounded by Housing Market Decline
CBS alone in questioning GSEs over the 'disaster.' Watch the live news report: http://www.eyeblast.tv/public/checker.aspx?v=hd8znznzIr
CBS alone in questioning GSEs over the 'disaster.'
By Kyle Gillis
Business & Media Institute
8/25/2010 11:04:45 AM
On August 24, all three network evening news broadcasts led with stories on the tumbling housing market. While ABC and NBC fretted over another economic apocalypse, CBS reporter Anthony Mason looked at the effect government-sponsored entities (GSE’s) Freddie Mac and Fannie Mae have on the housing market.
“The steep fall off in housing sales highlights the degree to which the government has been propping up the housing market,” said Mason, “and the two biggest pillars of that system, Fannie Mae and Freddie Mac, are facing a crisis.”
As the Business & Media Institute has documented, the GSE’s have faced a crisis for years, but Mason was the only evening news reporter to investigate the GSE’s instead of hiding from the falling sky.
“The government has already pumped nearly $150 billion into Fannie and Freddie to keep them afloat, and some say taxpayers could end up with a trillion dollar bill,” Mason reported.
Bloomberg reported the possible $1 trillion taxpayer cost over two months ago and, while Mason mentioned the Future of Housing Finance Conference panel discussion on housing solutions, CBS failed to report on the conference last week when it was actually held. Rather, CBS chose to air a story on fedora hats.
At the very end of his report, Mason returned to his liberal talking points when substitute anchor Harry Smith questioned whether the stimulus was helping the economy.
“Well in fact, the Congressional Budget Office came out with a report today that suggested the stimulus added as many as 3.3 million jobs to the economy and boosted GDP by 4.5 percent,” Mason said. “If that’s accurate, the stimulus, in fact, saved us from another recession.”
By contrast, NBC ‘Nightly News’ host Brian Williams harped on the poor housing numbers without investigating the cause of the numbers.
“You can probably look around and see our lead story tonight. Housing, the real estate market, it’s a disaster,” Williams said.
CBS has been almost alone in challenging the GSE’s, as the networks ignore the GSEs’ role in the housing mess. The networks remained silent on the GSE’s absence in the financial reform bill and only when the housing market plummets do the networks consider questioning them.
CBS alone in questioning GSEs over the 'disaster.'
By Kyle Gillis
Business & Media Institute
8/25/2010 11:04:45 AM
On August 24, all three network evening news broadcasts led with stories on the tumbling housing market. While ABC and NBC fretted over another economic apocalypse, CBS reporter Anthony Mason looked at the effect government-sponsored entities (GSE’s) Freddie Mac and Fannie Mae have on the housing market.
“The steep fall off in housing sales highlights the degree to which the government has been propping up the housing market,” said Mason, “and the two biggest pillars of that system, Fannie Mae and Freddie Mac, are facing a crisis.”
As the Business & Media Institute has documented, the GSE’s have faced a crisis for years, but Mason was the only evening news reporter to investigate the GSE’s instead of hiding from the falling sky.
“The government has already pumped nearly $150 billion into Fannie and Freddie to keep them afloat, and some say taxpayers could end up with a trillion dollar bill,” Mason reported.
Bloomberg reported the possible $1 trillion taxpayer cost over two months ago and, while Mason mentioned the Future of Housing Finance Conference panel discussion on housing solutions, CBS failed to report on the conference last week when it was actually held. Rather, CBS chose to air a story on fedora hats.
At the very end of his report, Mason returned to his liberal talking points when substitute anchor Harry Smith questioned whether the stimulus was helping the economy.
“Well in fact, the Congressional Budget Office came out with a report today that suggested the stimulus added as many as 3.3 million jobs to the economy and boosted GDP by 4.5 percent,” Mason said. “If that’s accurate, the stimulus, in fact, saved us from another recession.”
By contrast, NBC ‘Nightly News’ host Brian Williams harped on the poor housing numbers without investigating the cause of the numbers.
“You can probably look around and see our lead story tonight. Housing, the real estate market, it’s a disaster,” Williams said.
CBS has been almost alone in challenging the GSE’s, as the networks ignore the GSEs’ role in the housing mess. The networks remained silent on the GSE’s absence in the financial reform bill and only when the housing market plummets do the networks consider questioning them.
Monday, August 16, 2010
Housing market feels impact of HST introduction
TORONTO -- The new harmonized sales tax introduced in British Columbia and Ontario last month had an immediate impact on the housing market, according to the Canadian Real Estate Association.
The Ottawa-based group, which represents 100 boards across the country, said July sales plunged 6.8% on a seasonally adjusted basis from a month ago, a decline “almost entirely the result of fewer sales in British Columbia and Ontario.”
The slowdown had been expected as consumers rushed to buy homes ahead of the July 1 implementation in those provinces. The HST only applies to services used in purchasing and selling an existing home, such as real estate commission, and not the actual sale price.
In British Columbia sales dropped 14.1% from a month ago on a seasonally adjusted basis and Ontario the decline was 8%. The two provinces accounted for 85% of the the change in national activity.
“The soft sales figures we’re seeing right now can be attributed in part to accelerated home purchases earlier in the year,” said Georges Pahud, CREA president.
The group noted the drops in sales was smaller than in previous months with the Prairie provinces and Quebec staying even with June levels.
However, sales are showing they cannot keep pace with the blistering activity of the second half of 2009. Actual July sales dropped 30% from a year ago when activity set a record for the month. Still, for the first seven months of this year sales remain up 5.6% from a year ago. CREA warned activity will be off for the rest of of 2010 on a year-over-year basis.
“Activity may remain at lower levels for some time, but ultimately we expect a more stable market to emerge, with demand coming back into line with economic fundamentals, said Mr. Pahud. “While the outlook for economic and job growth remains generally positive nationally and in all provinces, the pace of the recovery will vary by region.”
The housing market continues to get a boost from supply dropping which is expected to keep prices stable. The seasonally adjusted number of new residential listings fell 7.2% in July from June — the third consecutive month-over-month decrease and the steepest drop in more than a decade.
But the impact on prices, which are the now relatively flat, was minimal. The average price of a homes sold in July was $330,351, just a 1% increase from a year. Again, CREA said the lack of activity in B.C. and Ontario, which included two of the country’s most expensive marketed, likely skewed average prices down.
On province-by-province basis, prices also dropped in Nova Scotia and Prince Edward Island but every other province had gains above the national average.
Overall inventory is climbing. The number of months of inventory, which represents the number of months it would take to sell current inventories at the current rate of sales activity, was seven month in July. A year ago the number was 4.4 months.
© Copyright (c) National Post
The Ottawa-based group, which represents 100 boards across the country, said July sales plunged 6.8% on a seasonally adjusted basis from a month ago, a decline “almost entirely the result of fewer sales in British Columbia and Ontario.”
The slowdown had been expected as consumers rushed to buy homes ahead of the July 1 implementation in those provinces. The HST only applies to services used in purchasing and selling an existing home, such as real estate commission, and not the actual sale price.
In British Columbia sales dropped 14.1% from a month ago on a seasonally adjusted basis and Ontario the decline was 8%. The two provinces accounted for 85% of the the change in national activity.
“The soft sales figures we’re seeing right now can be attributed in part to accelerated home purchases earlier in the year,” said Georges Pahud, CREA president.
The group noted the drops in sales was smaller than in previous months with the Prairie provinces and Quebec staying even with June levels.
However, sales are showing they cannot keep pace with the blistering activity of the second half of 2009. Actual July sales dropped 30% from a year ago when activity set a record for the month. Still, for the first seven months of this year sales remain up 5.6% from a year ago. CREA warned activity will be off for the rest of of 2010 on a year-over-year basis.
“Activity may remain at lower levels for some time, but ultimately we expect a more stable market to emerge, with demand coming back into line with economic fundamentals, said Mr. Pahud. “While the outlook for economic and job growth remains generally positive nationally and in all provinces, the pace of the recovery will vary by region.”
The housing market continues to get a boost from supply dropping which is expected to keep prices stable. The seasonally adjusted number of new residential listings fell 7.2% in July from June — the third consecutive month-over-month decrease and the steepest drop in more than a decade.
But the impact on prices, which are the now relatively flat, was minimal. The average price of a homes sold in July was $330,351, just a 1% increase from a year. Again, CREA said the lack of activity in B.C. and Ontario, which included two of the country’s most expensive marketed, likely skewed average prices down.
On province-by-province basis, prices also dropped in Nova Scotia and Prince Edward Island but every other province had gains above the national average.
Overall inventory is climbing. The number of months of inventory, which represents the number of months it would take to sell current inventories at the current rate of sales activity, was seven month in July. A year ago the number was 4.4 months.
© Copyright (c) National Post
Monday, August 2, 2010
CREA lowers housing forecast again
Last Updated: Friday, July 30, 2010 12:04 PM ETCBC News
The number of resale homes sold in Canada is forecast to hit 459,600 in 2010, a 1.2 per cent decline from 2009.
A real estate agent puts up a sold sign in front of a house in Toronto in April. The Canadian Real Estate Association expects home prices to decrease in 2011. (Darren Calabrese/Canadian Press)
In its latest housing forecast Friday, the Canadian Real Estate Association said weaker sales activity in the key spring homebuying season in Canada's four most populous provinces prompted the downgrade.
"The jump in national sales activity earlier this year likely borrowed from the future," CREA president George Pahud said.
And expected interest rate increases to come will do nothing to stoke the real estate fire that burned brightly during the tail end of the recession.
Sales are projected to drop even further, by 7.3 per cent, to 426,100 units in 2011.
The national average home price is forecast to rise 3.5 per cent in 2010 to $331,600, with increases in all provinces. The national average price is then forecast to ease by 0.9 per cent to $328,600 in 2011.
The agency already lowered its 2010 sales forecast at the start of June. At that time, the agency was expecting 490,600 units to be sold this year.
Friday, July 16, 2010
Canadian real estate: A soft landing or something worse?
CTV News - July 16, 2010
Michael Babad
These are stories Report on Business is following today. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.
Housing market pace slows
Canada's housing market is cooling off after its record-setting pace in the post-recession period. The Canadian Real Estate Association said today existing home sales fell 8.2 per cent in June from a month earlier, largely because of a slower pace in Toronto and Calgary. The national average resale price dipped 1.2 per cent, to $342,662, from May's record $346,881. That's still almost 5 per cent above last year's prices. Here are the views of four economists:
Adrienne Warren, Bank of Nova Scotia: "We expect to see a further slowing in sales over the second half of the year as interest rates gradually drift up. (It should be noted, however, that sales are still at a historically high level despite this year’s pullback, supported by improving employment conditions and still-low borrowing costs.) While this in turn will likely put some further modest downward pressure on prices, listings are also beginning to trend lower, which will help to maintain a fairly healthy balance between buyers and sellers."
David Rosenberg, Gluskin Sheff + Associates: "The Canadian housing market at one point during last year's parabolic surge in sales and pricing got as much as 20 per cent overvalued. In recent months, demand has weakened under the weight of eroding homeowner affordability. At the same time, the rush of new construction has elevated the supply side of the equation. and so what falls out these shifting demand and supply curves is a reduction in prices - the long awaited correction is here. Remember - excesses in one direction are generally followed by excesses in the other direction. And bubbles never correct by going sideways. In a nutshell, there's more air to come out of this Canadian housing balloon."
Douglas Porter, BMO Nesbitt Burns: "By some appearances, Canadian home sales have done their best impression of a capsized canoe in the wake of the new tighter mortgage insurance rules and the modest back-up in borrowing costs in the spring. Sales were also front-end loaded in 2010 ahead of the [harmonized sales tax] and are now in rapid reverse. While the headlines may look soggy for the next few months, there are reasons to believe the market could soon regain its balance - long-term mortgage rates have dropped, employment remains on a roll, and prices have stabilized."
Pascal Gauthier, Toronto-Dominion Bank: "After improving markedly in 2008, home affordability eroded significantly in 2009. With the typical lag, this is naturally slowing the pace of sales. Nonetheless, the housing market slowdown should be cushioned by an improving employment and income picture. The level of interest rates remains quite supportive of sales activity, and rising interest rates would only occur against a stronger overall economic backdrop."
Michael Babad
These are stories Report on Business is following today. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.
Housing market pace slows
Canada's housing market is cooling off after its record-setting pace in the post-recession period. The Canadian Real Estate Association said today existing home sales fell 8.2 per cent in June from a month earlier, largely because of a slower pace in Toronto and Calgary. The national average resale price dipped 1.2 per cent, to $342,662, from May's record $346,881. That's still almost 5 per cent above last year's prices. Here are the views of four economists:
Adrienne Warren, Bank of Nova Scotia: "We expect to see a further slowing in sales over the second half of the year as interest rates gradually drift up. (It should be noted, however, that sales are still at a historically high level despite this year’s pullback, supported by improving employment conditions and still-low borrowing costs.) While this in turn will likely put some further modest downward pressure on prices, listings are also beginning to trend lower, which will help to maintain a fairly healthy balance between buyers and sellers."
David Rosenberg, Gluskin Sheff + Associates: "The Canadian housing market at one point during last year's parabolic surge in sales and pricing got as much as 20 per cent overvalued. In recent months, demand has weakened under the weight of eroding homeowner affordability. At the same time, the rush of new construction has elevated the supply side of the equation. and so what falls out these shifting demand and supply curves is a reduction in prices - the long awaited correction is here. Remember - excesses in one direction are generally followed by excesses in the other direction. And bubbles never correct by going sideways. In a nutshell, there's more air to come out of this Canadian housing balloon."
Douglas Porter, BMO Nesbitt Burns: "By some appearances, Canadian home sales have done their best impression of a capsized canoe in the wake of the new tighter mortgage insurance rules and the modest back-up in borrowing costs in the spring. Sales were also front-end loaded in 2010 ahead of the [harmonized sales tax] and are now in rapid reverse. While the headlines may look soggy for the next few months, there are reasons to believe the market could soon regain its balance - long-term mortgage rates have dropped, employment remains on a roll, and prices have stabilized."
Pascal Gauthier, Toronto-Dominion Bank: "After improving markedly in 2008, home affordability eroded significantly in 2009. With the typical lag, this is naturally slowing the pace of sales. Nonetheless, the housing market slowdown should be cushioned by an improving employment and income picture. The level of interest rates remains quite supportive of sales activity, and rising interest rates would only occur against a stronger overall economic backdrop."
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