Canada’s Real Estate Housing Market Makes Soft Landing, Not Big Bump

Posted by Alan Zunec on Thursday, December 13th, 2012 at 1:53pm.

For months rumors of a housing crash have been circulating around the country. Today, according to a report put out by Scotiabank, the crash was more of a soft landing. Sales are slower, but the prices and those sales are still steady.

If we look at October, sales nationwide were about ten percent less than in the spring of this year, but only fractionally behind average prices seen during the past ten years. Adrienne Warren, an economist with Scotiabank, noted that the moderation in the real estate market corresponds with a similar slow down in the job market seen this past summer. Warren continued to warn Canadians to take care when borrowing money and to not borrow more than needed.

The slow down in the industry is also attributed in part to the changing of the lending rules for mortgages, tightened again this past July. That changed the maximum amortization range from 30 to just 25 years, making house payments go up and putting many first time buyers out of the market. But Warren notes the decline isn’t as bad as some have predicted. There are also unconfirmed reports about decreased interest by foreign investors in the housing market.

The Canadian Real Estate Association released a report this past November, noting that resale homes nationwide were down in October, compared to the prior September and October of 2011. Montreal, Toronto and Vancouver, once Canada’s hottest real estate markets, have been experiencing decreased sales for nearly 12 months.

Warren also noted that the real estate housing market is likely to remain soft for the time being. That could cause some decrease in both prices and sales, particularly in those metro areas that are already considered a buyer’s market, or that have an excess of inventory already on the books. But, Canada’s economy remains healthy, with a healthy increase in jobs which should temper the decline.

On the world front, housing markets appear relatively weak but in several countries the falling prices have at least begun to stabilize. Most of the advanced as well as up and coming nation markets did show a negative inflation rate in 2013’s third quarter, compared to the same time period in 2012.

The United States, United Kingdom, China and Australia are among the countries showing some stabilization. Even though interest rates are low in many areas, most people are being more cautious about purchasing homes. It’s more of a wait and see atmosphere. Europe still maintains the weakest housing market, with little improvement.

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