Has Canada achieved the ‘elusive soft landing’?

The verdict may be in: a new report by global financial giant Credit Suisse suggests Canada has already avoided the kind of severe market correction many investors continue to worry about.
“Rapid growth in mortgages fuelled a continuing rise in household debt,” the company said in its report. “Mortgage terms were tightened, however, a few years ago, which appears to have had the desired effect as house price increases have moderated in the last three years. It may be that Canada’s housing market has achieved the elusive soft landing.”
That news, however, will likely surprise some investors alarmed by CREA September sales data pointing to a 1.4 per cent drop in seasonally adjusted month-over-month sales. That slowdown suggested a more precipitous decline may be in the offing.
“Low mortgage interest rates have been key to supporting home sales activity and prices,” says Gregory Klump, CREA’s chief economist. “Interest rates are likely to remain low well into next year, which is supportive for home sales activity and prices.”
Unadjusted sales for all property types rose 10.6 per cent year-over-year to 42,151 units, led by significant gains in British Columbia, Saskatchewan, New Brunswick and Prince Edward Island. New listings rose eight per cent, thanks to growth in the Maritime provinces, while the average price increased almost six per cent over 2013, to $408,795.
That price hike, in particular, will interest analysts. The Credit Suisse report stated that Canadians are better able to afford higher-priced homes. Since 2000, household wealth grew at an annual rate of 7.1 per cent.

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  • by Real estate Pat 2014-10-31 12:48:44 PM

    This is good news for the Canadian real estate industry. However, I take issue with the report stating that Canadians are better able to afford higher-priced homes. This is a sweeping generalization, is it not?

  • by rokman 2014-12-11 2:36:44 AM

    Yes, I would say it is definitely a generalization. Aren't Canadians up to their ears in debt? As a collective country, we've generally been overly confident since the 2008 crash as our wages have gone up, markets have gone up and jobs rebounded. Now that we're seeing $61 oil, jobs and budgets are being cut and people (especially in AB where I live) have stretched themselves so far, their debt loads are just immense. Not all; but it's a general observation. The question is, as it pertains to me as a renter w/ a girlfriend of 7 years, are we right in waiting to jump into our first home purchase? I'm 31, she's 29. We have no kids. Dual income in the oil & gas sector. I am of the opinion that we're better off to wait this economic turmoil out and keep renting in the short term. We're window shopping for homes, but the numbers we're seeing for the type of home we want to get into (a long term home where we can raise a family) are all $450k-$500k and that number is just way too high for us. I think Canadians are going to continue to lose jobs and house payments are going to be in serious jeopardy for a significant percentage of us.

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