{"id":17511,"date":"2021-03-10T10:10:00","date_gmt":"2021-03-10T18:10:00","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=17511"},"modified":"2021-03-05T16:55:50","modified_gmt":"2021-03-06T00:55:50","slug":"fear-of-missing-out-causing-home-prices-to-soar","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2021\/03\/fear-of-missing-out-causing-home-prices-to-soar\/","title":{"rendered":"&#8220;Fear of Missing Out&#8221; Causing Home Prices to Soar"},"content":{"rendered":"<p style=\"text-align: justify;\">By now it\u2019s clear that the pandemic likely won\u2019t be causing a double-digit percentage drop in Canadian home prices as some economists had predicted back in 2020.<\/p>\n<p style=\"text-align: justify;\">Instead, the market is now confronting a potential scenario that sees home prices continuing to rise rapidly across the country, setting housing on a path to overheating.<\/p>\n<p style=\"text-align: justify;\">RBC Senior Economist Robert Hogue wrote this week that COVID-19 \u201cwasn\u2019t the much-feared Armageddon for Canada\u2019s housing market.\u201d Government aid, support from financial institutions through mortgage deferral programs and record-low interest rates all played a role in keeping the market above water and setting it on a course for a robust rebound, Hogue wrote.<\/p>\n<p style=\"text-align: justify;\">Since the recovery began in early summer 2020, homebuyers have rushed into the market, with major centres like Toronto, Vancouver and Montreal all seeing remarkable monthly transaction totals with housing supply lagging far behind demand.<\/p>\n<p style=\"text-align: justify;\">\u201cSuper-strong demand is quickly depleting inventories across the country. Competition between buyers is extremely fierce in many markets (including smaller ones), and a \u2018fear of missing out\u2019 is taking hold,\u201d Hogue wrote.<\/p>\n<p style=\"text-align: justify;\">The economist says that, when introduced into the housing market, the fear of missing out dynamic often leads to \u201cself-reinforcing price trends.\u201d In other words, home buyers \u2014 or in some cases, real estate investors \u2014 believe that prices will continue to rise indefinitely. This view pushes more buyers into the market and further perpetuates rapid price growth for a period of time.<\/p>\n<p style=\"text-align: justify;\">This dynamic negatively impacts housing affordability and could lead to future market volatility and even a sharp price correction in the future.<\/p>\n<p style=\"text-align: justify;\">For Hogue, the primary risk in the short-term is Canada\u2019s housing market overheats, rather than collapses. This risk could spur governments to intervene as was the case in BC and Ontario in 2016 and 2017, respectively. It could also contribute to triggering a faster-than-expected rise in interest rates, which would deter some buyers from entering the market.<\/p>\n<p style=\"text-align: justify;\">Hogue is far from the only commentator keeping an eye on an overheating scenario for the Canadian housing market.<\/p>\n<p style=\"text-align: justify;\">Bank of Canada Governor Tiff Macklem told reporters in February that his team was monitoring the housing market for signs of overheating.<\/p>\n<p style=\"text-align: justify;\">Writing last month about Toronto\u2019s red-hot single-family home market, Realosophy President John Pasalis said he hoped to see the run-up in prices gradually cool in the coming months in the interest of keeping the market stable.<\/p>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/www.livabl.com\/2021\/03\/buyers-fear-of-missing-out-canadian-home-prices.html\" target=\"_blank\" rel=\"noopener\">RBC : Buyer&#8217;s &#8220;Fear of Missing Out&#8221; Causing Canadian Home Prices to Soar<\/a> by Sean MacKay | Livabl<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By now it\u2019s clear that the pandemic likely won\u2019t be causing a double-digit percentage drop in Canadian home prices as some economists had predicted back in 2020. Instead, the market &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2021\/03\/fear-of-missing-out-causing-home-prices-to-soar\/\">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-17511","post","type-post","status-publish","format-standard","hentry","category-market-updates"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>&quot;Fear of Missing Out&quot; Causing Home Prices to Soar &#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\/2021\/03\/fear-of-missing-out-causing-home-prices-to-soar\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"&quot;Fear of Missing Out&quot; Causing Home Prices to Soar &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"By now it\u2019s clear that the pandemic likely won\u2019t be causing a double-digit percentage drop in Canadian home prices as some economists had predicted back in 2020. 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