You can shake it, you can try to knock it down with the force of global economic crisis, but the Canadian housing market is proving resilient- this according to recent remarks made by BMO economists.
On the heels of the release of data suggesting that home resales rose by 12.3 % in July, year-over-year, Douglas Porter, Deputy Chief Economist, BMO Financial Group said: “Canadian housing remains surprisingly robust, thanks to still-low interest rates and solid job growth .While the strong year-over-year growth is flattered by a weak year-ago comparison – when the HST was introduced in B.C. and Ontario – sales are certainly faring better than what we expected earlier this year. While new listings have also risen recently, the backlog of unsold homes just nudged up last month, almost bang on the long-run average.”
“The recent financial market turmoil may temporarily weigh on activity, but sales should ultimately find support from continued exceptionally low borrowing costs.”
"Today’s data release is yet another sign that Canada’s real estate market has great resiliency,” said Laura Parsons, Mortgage Specialist, BMO Bank of Montreal. “As long as consumers continue to push demand, which remains the case, we see ongoing strength in the housing market across the country.”
Canadians should be mindful though, of affordability in taking on debt- and are reminded to stress test debts at higher interest rate levels.
Leslie Penney, Vice President, Business Development, APlus Mortgage Group/Mortgage Alliance, agrees that there in an environment of affordability being created: “With the US Fed stating that they will keep rates low until 2013, it kind of ties the hands of the Bank of Canada in such a way that they cannot increase rates too much from the US. Aside from increasing prices, as interest rates go down affordability goes up. Right now we're seeing a prolonged period of affordability, and it looks like it'll be on the table for a while yet.”
And as Penney suggests, this is an excellent time for all members of the industries to be proactive with clients. “From the real estate perspective now is a great time to inform buyers that affordability is at an all-time high. Regarding mortgage brokers, especially those with a clientele, now is a time to do a review with your clients and determine if their current mortgage suits their situation and how you may be able to save them a great deal in interest and shave years off their mortgage, and at the same time taking care of consumer debt which can be as high as 20%.”
“It's also a good time to work with real estate partners to demonstrate to their client base how they may be able to afford their first home or upgrade to a newer home and highlight the impact that these ultra low interest rates have on affordability.”
Source: PropertyWire.ca - Aug. 18/11