{"id":11215,"date":"2018-12-24T11:11:35","date_gmt":"2018-12-24T19:11:35","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=11215"},"modified":"2018-12-16T18:05:29","modified_gmt":"2018-12-17T02:05:29","slug":"household-debt-is-on-the-rise-home-prices-are-falling-new-construction-facing-new-concerns","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2018\/12\/household-debt-is-on-the-rise-home-prices-are-falling-new-construction-facing-new-concerns\/","title":{"rendered":"Household Debt is on The Rise, Home Prices are Falling &#038; New Construction Facing New Concerns"},"content":{"rendered":"<p style=\"text-align: justify;\">Just a month ago, industry experts seemed relatively pleased with the direction the Canadian housing market was heading in \u2014 home sales and prices were rising at a moderate clip, after months of slumping activity. But now, things may have started to change.<\/p>\n<p style=\"text-align: justify;\">This week, new reports on high household debt levels and falling home prices have given some industry watchers pause, as the current rising interest rate environment could exacerbate both issues.<\/p>\n<p style=\"text-align: justify;\">For a closer look at some of the issues facing the market this month, Livabl has rounded up the latest expert commentary to keep you in the know.<\/p>\n<p style=\"text-align: justify;\"><strong>Household debt is on the rise<\/strong><\/p>\n<p style=\"text-align: justify;\">The second quarter of 2018 saw an uptick in household debt, in a country that already has some of the highest debt levels in the world<\/p>\n<p style=\"text-align: justify;\">Rising interest rates have made the picture even more precarious, according to the latest report from the Canada Mortgage and Housing Corporation (CMHC). The ratio of debt-to-disposable income rose three percent in both Toronto and Vancouver in the second quarter, from 239 and 205 percent to 242 and 208 percent, respectively.<\/p>\n<p style=\"text-align: justify;\">\u201cWith interest rates on the rise, highly indebted households could see their increased required [mortgage] payments exceed their budgets,\u201d reads the report from the federal housing agency. \u201cHighly indebted households have usually few debt consolidation options to respond to increasing debt services costs.\u201d<\/p>\n<p style=\"text-align: justify;\">The Bank of Canada hiked the overnight rate to 1.75 percent in October, triggering a corresponding rise in mortgage rates. As rates continue to climb in 2019, Canadians could begin to struggle to make their monthly payments.<br \/>\n\u201cIt is a vulnerability that has to be closely watched should interest rates continue to move higher,\u201d writes Brent Weimer, CMHC\u2019s senior housing researcher, in a statement.<\/p>\n<p style=\"text-align: justify;\"><strong>New construction facing new headwinds<\/strong><\/p>\n<p style=\"text-align: justify;\">The Canadian new construction market has been posting solid numbers throughout the fall \u2014 but that could be about to change.<\/p>\n<p style=\"text-align: justify;\">\u201cOn a trend basis, housing starts appear to have troughed, with some upward momentum of late,\u201d writes Fotios Raptis, a senior economist with TD, in a recent note.<\/p>\n<p style=\"text-align: justify;\">Housing starts provide a way to track the health of the new homebuilding market, while measuring the growth of new housing supply. And, according to Raptis, they could plateau in the new year, thanks to series of policy measures introduced in 2018.<\/p>\n<p style=\"text-align: justify;\">\u201cGoing forward, higher interest rates and affordability constraints in major [markets] (GTA, Greater Vancouver Area) could act to hold the pace of new residential construction,\u201d he writes.<\/p>\n<p style=\"text-align: justify;\">But a steep drop off in starts doesn\u2019t appear to be in the cards \u2014 ultimately a strong demand for new housing will keep the numbers in the green in 2019.<\/p>\n<p style=\"text-align: justify;\">\u201cA steep downturn in homebuilding nationwide appears unlikely,\u201d writes Raptis. \u201cCanada\u2019s population is on the rise, medium-term income growth should remain healthy, and most markets are generally not overbuilt.\u201d<\/p>\n<p style=\"text-align: justify;\"><strong>Home prices are falling<\/strong><\/p>\n<p style=\"text-align: justify;\">It was another month of sliding home prices for the national housing market in November. The Teranet-National Bank Composite National House Price Index fell 0.3 percent, following a 0.4 percent drop in October.<\/p>\n<p style=\"text-align: justify;\">\u201cHome price weakness in some major metropolitan areas is evidenced by a second consecutive decline in the national Composite Index,\u201d writes Marc Pinsonneault, a senior economist with the National Bank, in his most recent analysis.<br \/>\nAccording to Pinsonneault, stricter mortgage qualification rules and higher interest rates are to blame for what he deems a \u201csignificant\u201d cooling of demand across the country.<\/p>\n<p style=\"text-align: justify;\">\u201cFor instance, in Vancouver, November was a fourth month in a row without a rise in home prices, for a cumulative drop of 1.8 percent,\u201d he writes. \u201cIn Toronto, prices declined over the last three months, for a total loss of 0.4 percent.\u201d<\/p>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/www.livabl.com\/2018\/12\/canadian-housing-market-concerns-experts-worried.html\">3 Canadian Housing Market Concerns That Expects Are Worried About This Month<\/a> by Sarah Niedoba | Livabl<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Just a month ago, industry experts seemed relatively pleased with the direction the Canadian housing market was heading in \u2014 home sales and prices were rising at a moderate clip, &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2018\/12\/household-debt-is-on-the-rise-home-prices-are-falling-new-construction-facing-new-concerns\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"class_list":["post-11215","post","type-post","status-publish","format-standard","hentry","category-market-updates"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Household Debt is on The Rise, Home Prices are Falling &amp; New Construction Facing New Concerns &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2018\/12\/household-debt-is-on-the-rise-home-prices-are-falling-new-construction-facing-new-concerns\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Household Debt is on The Rise, Home Prices are Falling &amp; 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