“We’re probably not going to see as many first-time buyers in the market,” Ted Tsiakopoulos, the Ontario regional economist for Canada Mortgage and Housing Corporation, told more than 400 brokers at the event, hosted by the Independent Mortgage Brokers Association of Ontario. “You’ve probably already seen that in your business. We’re not creating as many households in your traditional first-time home buyer category of 25 to 40.”
There are other factors responsible for declines in that key demographic, with CMHC economists anticipating both short- and long-term impact for Ontario. In addition to an aging population, the province is already facing a slowdown of about six per cent in home sales for 2011, as consumers cancel purchase plans in order to pay down record levels of debt and first-time buyers, among others, are deterred by rising interest rates.
While that double whammy should affect buyers across the country, said Tsiakopoulos, central and eastern Canada will be most affected given slow period ahead for their consumer-focused manufacturing sectors. Demand for those goods and services is likely to drop, said the economist, as Canadian consumers claw back on their spending. The high-flying Loonie is also expected to clip U.S. demand for those exports in the pivotal American market.
It’s a different story for the West, Tsiakopoulos told brokers. An international spike in demand for natural resources – from oil to timber – means BC, Alberta and the prairies won’t experience the kind of economic slowdown responsible for zapping homebuyer interest.
The reality is reflected in new projections from the CMHC. The corporation suggests that the West – and to a lesser extent, Northern Ontario -- will continue to see the number of home sales grow, while Southern Ontario will drag the province’s overall performance down to a six per cent deficit. The Maritimes could see a drop in sales closer to 20 per cent, said Tsiakopoulos.
Ontario home prices, which have seen annualized growth of six per cent over the last 20 year will also get hit, realizing increases more in line with inflation.
But, even the slowest of Canadian markets should rebound by early 2012, he told brokers, characterizing the current market as stable: “There’s very little evidence that there’s a housing bubble,” Tsiakopoulos said.
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