{"id":13023,"date":"2019-07-10T10:10:07","date_gmt":"2019-07-10T17:10:07","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=13023"},"modified":"2019-06-25T14:36:54","modified_gmt":"2019-06-25T21:36:54","slug":"canadas-housing-market-is-more-vulnerable-than-the-uss","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2019\/07\/canadas-housing-market-is-more-vulnerable-than-the-uss\/","title":{"rendered":"Canada’s Housing Market is More Vulnerable Than The US’s"},"content":{"rendered":"

If a recession sweeps through North America, Canada would be hit harder than the US this time around \u2014 and it\u2019s partly because of the economy\u2019s overreliance on the housing market.<\/p>\n

So suggests Eric Lascelles, chief economist for RBC Global Asset Management, in a #MacroMemo, his series of weekly dispatches on economic news.<\/p>\n

\u201cWere Canadian home prices, resale activity and housing starts to all decline simultaneously and significantly \u2014 as they sometimes do during recessions \u2014 that would weigh heavily on the Canadian economy in a way the US would not experience,\u201d Lascelles writes.<\/p>\n

That would be a reversal of what happened in the wake of the 2008 Financial Crisis and subsequent recession.<\/p>\n

While a subprime mortgage market collapse brought the US housing market \u2014 and broader economy \u2014 to its knees, Canada\u2019s more stringent regulations are credited with helping the country emerge relatively unscathed.<\/p>\n

\u201cCanada\u2019s housing boom continued for another decade, due in significant part to the ultra-low rates brought about by the financial crisis itself,\u201d Lascelles explains.<\/p>\n

That growth has resulted in housing activity accounting for close to 22 percent of Canada\u2019s GDP, whereas the historical norm is 19 percent.<\/p>\n

\u201cIn contrast, the US housing market is currently a smaller share than normal of its economy,\u201d he continues.<\/p>\n

Meantime, Canadian households are more highly leveraged than their neighbours to the south.<\/p>\n

The debt-to-income ratio in Canada has been trending higher, while stateside it is easing.
\n\"\"<\/a>
\nChart : RBC GAM<\/p>\n

But while there are the ingredients present to make a recession in Canada worse, Lascelles isn\u2019t flagging the housing market as an area he expects to cause such a downturn.<\/p>\n

\u201cTo reiterate, there is little to suggest that Canada\u2019s housing market is at particular risk of inducing a recession by itself. If anything, housing has recently stabilized,\u201d says Lascelles.<\/p>\n

According to the Canadian Real Estate Association, home sales increased 6.7 percent on a year-over-year basis this May, while prices were down 0.6 percent annually. The association considers nearly three quarters of local markets to be \u201cbalanced.\u201d<\/p>\n

\u201cBut the country\u2019s housing market is nevertheless more vulnerable than usual, capable of worsening a recession should a North American recession increase the unemployment rate,\u201d Lascelles adds.<\/p>\n

Canada’s Housing Market is More Vulnerable Than The US’s If a Recession Hits<\/a> by Josh Sherman | Livabl<\/p>\n","protected":false},"excerpt":{"rendered":"

If a recession sweeps through North America, Canada would be hit harder than the US this time around \u2014 and it\u2019s partly because of the economy\u2019s overreliance on the housing … [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-13023","post","type-post","status-publish","format-standard","hentry","category-market-updates"],"yoast_head":"\nCanada's Housing Market is More Vulnerable Than The US's • 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\/2019\/07\/canadas-housing-market-is-more-vulnerable-than-the-uss\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" 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