There has been no shortage of naysaying within Canada’s housing market, for good reason. Various government bodies have taken measures specifically designed to prevent a so-called bubble, and the results speak for themselves. Many recent housing numbers show a slowdown. But the question remains, what about the road ahead? Will the market continue its slower pace? Recent evidence suggests maybe not, but the entire topic in general should serve as yet another lesson in analyzing Canada’s often talked about housing sector.
By the numbers
First, let’s take a quick look at that recent evidence. According to the Canadian Real Estate Association (CREA), national home sales increased in the month of September, up 2.1 percent from the previous month. This is the second month in a row that saw an increase. The number of newly listed homes also rose in September, up 4.9-percent from August. The MLS Home Price Index (HPI) was also up in September, showing a 10.7-percent increase from the same month last year. And the national average sale price also increased in September, rising 2.8 percent from the same time in 2016.
But, if your conclusion from this recent positive news in the housing sector is that it’s just another temporary blip, here’s another piece of news that might draw your interest. According to TD Bank senior economist, Michael Dolega, any current slowdowns in the market should be a thing of the past upon reaching the middle of next year. He cited “fundamentally supported demand related to strong job growth and strengthening wage dynamics” as reasons for such optimism.
It’s not all doom-and-gloom
In other words, some of this most recent data and analysis should serve as yet another reminder to always take the ongoing naysaying with a grain of salt. And this is typical for so much of the discussion surrounding Canada’s housing market. The doomsayers have been at it for the better part of the decade, yet, even with all the government measures designed to pour water on growth, signs of growth continue.
Why is that? It’s because underlying demand in the housing market is strong, and all levels of government know it, too. That’s why they’re not afraid to engage in these market-cooling measures. They’re not meant to harm the market long-term, but only to ensure that market exuberance doesn’t get carried away, and also to allow politicians to hedge their bets, regardless of what happens.
So, as with all things related to media hype, as well as political maneuvering, always try to have a long-term view of the housing market. It’s not all doom-and-gloom, and evidence exists to suggest that demand will fuel growth for the foreseeable future.
ASCEND MIC is a mortgage investment corporation, with offices in Toronto and Richmond Hill, that specializes in various aspects of mortgage investing, lending, administration and more.