In yet another prediction of what is to come with the Canadian Real Estate Market, TD Economists are now predicting that the housing market in this country is due for a slowdown.
On the heels of a period of rapid price appreciation, they feel that Vancouver and Toronto will lead the way for a pullback.
TD predicts that on a national scale, resale activity will fall by 15.2% over the next two years, and that average prices will fall by 10.2% over the same time period.
They cite factors like the likely rise of interest rates, Flaherty’s mortgage restrictions, disparity between consumer prices and incomes and a drop in the number of first time homebuyers as the drivers behind this slowdown.
Vancouver is expected to have the sharpest price fall- with an expected drop of 25.4%, with Toronto prices expected to fall 11.7% through 2013. Although these price falls seem very significant, they could also be the sign of a market moderating- as both of these centres have had recent skyrocketing price appreciation due to an influx of foreign investment. This also underscores what many analysts have been pointing to of late- namely the vulnerability of these two centres to a market correction.
The condo market, in particular, is expected to falter price-wise- which also contributes to the notion that Vancouver and Toronto are more vulnerable to a price adjustment, considering the depth of the condo market in both of these areas.
Robert J. Morrow, Editor: www.HamiltonHomeReview.com,Sales Rep, Chase Realty Inc, Brokerage told Propertywire.ca that these surveys and predictions should be read with caution and those readers should always compare and contrast facts to get the full picture.
“It is important to balance information from financial institutions with that of other related industries to achieve a more accurate projection of the future. For example, earlier this week, CMHC stated that Burlington condo starts are on an increase. REIN predicts Southern Ontario (particularly Hamilton and Kitchener/Waterloo) to be strong investment hubs in the next decade or so. This is also the era of the richest batch of baby boomers since the term was coined, meaning many 20-30 year-olds are being funded by parents and grandparents in their quest to purchase their first homes or condos.”
That being said, he does agree that there is something of value to take from what this latest market analysis from TD Economics offers. “There is, of course, some truth to the release. I believe Vancouver and Toronto are struggling to break the bubble that started several years ago and has pushed the edges so far that many of their buying market is now moving into other, nearby markets. A recent ReMax report stated that high-end homes in Burlington/Oakville/Milton are on the rise in direct proportion to the decrease in high-end properties in Toronto suburbs like Richmond Hill and Vaughn.”
The real truth and impact of these reports can be seen in how it affects the average person, and sometimes being in the middle gives you the best vantage point from which to comment, as Morrow agrees:”The middle income Canadian is the one most affected by change. Not rich enough to buy a high-end property... and already in their first home, they are unable to move up to the next level either due to loss of income, high mid-level house prices, or too much obligation in other areas of their lives (children and parent support). And these are the ones most likely captured by surveys accomplished by banks as these are the ones more likely to respond. The common man looks to the banks and the governments to ease financial pressure and is tuned in to anything they may have to say. First time buyers and the rich simply find other options... and keep things going as usual.”