{"id":11252,"date":"2018-12-29T11:11:52","date_gmt":"2018-12-29T19:11:52","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=11252"},"modified":"2018-12-19T09:22:10","modified_gmt":"2018-12-19T17:22:10","slug":"canadas-central-bank-says-the-housing-market-is-stabilizing","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2018\/12\/canadas-central-bank-says-the-housing-market-is-stabilizing\/","title":{"rendered":"Canada&#8217;s Central Bank Says The Housing Market is Stabilizing"},"content":{"rendered":"<p style=\"text-align: justify;\">To hear the Bank of Canada tell it, the Canadian housing market is \u201cstabilizing.\u201d<\/p>\n<p style=\"text-align: justify;\">That\u2019s what the central bank said of home sales activity when it once again hiked the overnight interest rate, which influences the mortgage marketplace, by 25 basis points in October.<\/p>\n<p style=\"text-align: justify;\">But CIBC Deputy Chief Economist Benjamin Tal and his colleague Royce Mendes, a senior economist, aren\u2019t so sure.<\/p>\n<p style=\"text-align: justify;\">\u201cThe Bank of Canada also keeps arguing that the worst is now behind us and that housing markets are stabilizing. But, from our vantage point, it\u2019s difficult to agree,\u201d reads a report authored by Tal and Mendes.<\/p>\n<p style=\"text-align: justify;\">In the report, entitled Where Are We in the Canadian Housing Slowdown, the two economists lay out why they find it \u201cdifficult to agree\u201d with the central bank.<\/p>\n<p style=\"text-align: justify;\">Tal and Mendes suggest the Canadian housing market has yet to fully absorb the effects of higher interest rates, and that prices won\u2019t begin to balance until sometime next year.<\/p>\n<p style=\"text-align: justify;\">\u201cThe central bank\u2019s own workhorse model says it takes six quarters before the full impact of any rate hike is felt in the economy,\u201d they point out.<\/p>\n<p style=\"text-align: justify;\">After fostering a period of historically low interest rates to boost the economy, the Bank of Canada last year started gradually pulling up the overnight rate.<\/p>\n<p style=\"text-align: justify;\">This October marked the fifth time since July 2017 that the bank hiked the overnight rate by 25 basis points. So there is reason to believe the effects of monetary tightening haven\u2019t worked their way through the market yet, the report suggests.<\/p>\n<p style=\"text-align: justify;\">The current overnight rate is now 1.75 percent, with more hikes widely expected.<br \/><a href=\"https:\/\/www.roryc.ca\/blog\/?attachment_id=11253\" rel=\"attachment wp-att-11253\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone  wp-image-11253\" src=\"https:\/\/www.roryc.ca\/blog\/wp-content\/uploads\/2018\/12\/b20-housing-chart-288x223.jpg\" alt=\"\" width=\"575\" height=\"445\" srcset=\"https:\/\/www.roryc.ca\/blog\/wp-content\/uploads\/2018\/12\/b20-housing-chart-288x223.jpg 288w, https:\/\/www.roryc.ca\/blog\/wp-content\/uploads\/2018\/12\/b20-housing-chart.jpg 750w\" sizes=\"auto, (max-width: 575px) 100vw, 575px\" \/><\/a><br \/>Tal and Mendes also suggest that Vancouver hasn\u2019t finished adjusting to fallout from the B-20 rules, a federal policy move that subjects uninsured-mortgage applicants to stress testing.<\/p>\n<p style=\"text-align: justify;\">Basically, borrowers who could previously sidestep stress testing, which requires applicants to qualify for a higher mortgage rate than they are signing on for, by putting down 20 percent for an uninsured mortgage.<\/p>\n<p style=\"text-align: justify;\">Vancouver has yet to see a rebound in sales following the government\u2019s introduction of the B-20 rules in January, and as one of the country\u2019s largest and least affordable markets, the implications are national.<\/p>\n<p style=\"text-align: justify;\">\u201cIt appears that Toronto is stabilizing while Vancouver is still correcting,\u201d the report reads. \u201cLooking ahead, we expect more of the same. Population growth in Vancouver has been lagging behind Toronto\u2019s over the past two years.\u201d<\/p>\n<p style=\"text-align: justify;\">Then there is the much-talked-about rise in Vancouver\u2019s supply of condos. The number of new units that are completed but unsold continues to climb, the report says.<\/p>\n<p style=\"text-align: justify;\">The adjustment in the Canadian housing market in general, and in Vancouver and Toronto in particular, is not over yet,\u201d write Tal and Mendes. \u201cBut, we believe that market forces suggest prices will find equilibrium next year.\u201d<\/p>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/www.livabl.com\/2018\/12\/canadas-central-bank-housing-market-stabilizing.html\">Canada&#8217;s Central Bank Says The Housing Market is Stabilizing. These Economists Aren&#8217;t so Sure<\/a> by Josh Sherman | Livabl<\/p>\n\n","protected":false},"excerpt":{"rendered":"<p>To hear the Bank of Canada tell it, the Canadian housing market is \u201cstabilizing.\u201d That\u2019s what the central bank said of home sales activity when it once again hiked the &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2018\/12\/canadas-central-bank-says-the-housing-market-is-stabilizing\/\">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-11252","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>Canada&#039;s Central Bank Says The Housing Market is Stabilizing &#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\/canadas-central-bank-says-the-housing-market-is-stabilizing\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Canada&#039;s Central Bank Says The Housing Market is Stabilizing &#8226; 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