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Canadian housing market will balance in 2012: BMO

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guest | 30 Sep 2011, 08:34 PM Agree 0

Low mortgage rates and low unemployment and immigration will continue to push some demand, but it will be tempered by high house prices, elevated debt, and slowing employment, according to the report out Friday and authored by senior economist Sal Guatieri.Guatieri said home sales overall are likely to remain steady in 2012.“Prices should also stay put, similar to Alberta’s experience of the past four years following its boom,” he said. “However, the resource-rich provinces, notably Alberta and Saskatchewan, should outperform other regions since their economies are expected to grow the fastest.”The report warned housing is “moderately” overpriced in most parts of Canada, especially in Vancouver, and thus vulnerable to correction. A recession this year, which has been predicted already by some economists in Canada, is the biggest threat to the housing market, said Gautieri. A smaller threat would be if interest rates significantly spike up next year. Alternatively, rates remaining low could also be dangerous.“Low rates are a threat too, since they could cause the market to heat up again, only to correct when rates eventually rise,” Gautieri said the report. “More buyers are turning to variable-rate mortgages on expectations that rates could stay low for some time, or even decline.”He pointed out resales have already slowed to their past-decade norm, and prices are starting to flatten on a seasonally-adjusted basis. The market is still strong, but a slowing of the recent housing market gains are coming, he concludes.“After cruising at high altitudes for most of the past decade, Canada’s housing market is on track for a soft landing in the year ahead, though turbulent global economic skies could make for a bumpy ride.”
  • James McNaught, Pres. Pacwest International Consul | 01 Oct 2011, 06:43 PM Agree 0
    Based on 40 years experience as a real estate consultant we are entering a downward market.Contrary to the report and based on current research it is my opinion that the world economic crisis, will be getting worse rather than better having a negative impact on the market.Real estate prices overall with see a downward trend. In Vancouver there is an oversupply of new condominiums on the market resulting in price reductions. New single family homes in Richmond and Vancouver West are not selling, and the ones that are selling are selling for less than asking price. There is no indications, based on the research that interest rates will be going up. Don't be surprised if the BoC reduces the rate from 1%. The market is general cannot be viewed as balanced either now or into 2012..
  • James McNaught, Pres. Pacwest International Consul | 01 Oct 2011, 07:43 PM Agree 0
    Based on 40 years experience as a real estate consultant we are entering a downward market.Contrary to the report and based on current research it is my opinion that the world economic crisis, will be getting worse rather than better having a negative impact on the market.Real estate prices overall with see a downward trend. In Vancouver there is an oversupply of new condominiums on the market resulting in price reductions. New single family homes in Richmond and Vancouver West are not selling, and the ones that are selling are selling for less than asking price. There is no indications, based on the research that interest rates will be going up. Don't be surprised if the BoC reduces the rate from 1%. The market is general cannot be viewed as balanced either now or into 2012..
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