{"id":17541,"date":"2021-03-15T11:11:00","date_gmt":"2021-03-15T18:11:00","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=17541"},"modified":"2021-03-09T13:27:53","modified_gmt":"2021-03-09T21:27:53","slug":"overheated-housing-markets-with-further-increases-in-prices","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2021\/03\/overheated-housing-markets-with-further-increases-in-prices\/","title":{"rendered":"Overheated Housing Markets with Further Increases in Prices"},"content":{"rendered":"\n<pre class=\"wp-block-code\"><code><\/code><\/pre>\n\n\n<p style=\"text-align: justify;\">Whispers of bubble conditions in Canada\u2019s housing market have become cacophonous of late and, consequently, the spectre of regulation has begun looming.<\/p>\n<p style=\"text-align: justify;\">\u201cBe on guard for macroprudential measures,\u201d Derek Holt, Scotiabank\u2019s head of capital markets economics, wrote in a letter to clients on March 2. \u201cOttawa has been caught completely off-guard in the magnitude of the housing response to very low financing costs.\u201d<\/p>\n<p style=\"text-align: justify;\">Benjamin Tal, deputy chief economist of CIBC Capital Markets, lent his voice to the fray and, according to BNN, warned that the country\u2019s housing market could be \u201centering a speculative phase.\u201d<\/p>\n<p style=\"text-align: justify;\">\u201cIt\u2019s possible given the recent increases in prices, that some people are speculating about further increases in prices,\u201d he said. \u201cThat was missing in the market until now.\u201d<\/p>\n<p style=\"text-align: justify;\">However, not everybody agrees with such analyses. Dustan Woodhouse, president of Mortgage Architects, says that foreign speculation is impossible because mortgage lenders aren\u2019t presently loaning out-of-country Canadians any money, let alone foreign nationals, thereby precluding the possibility that foreign money is to blame for white-hot market conditions. Yet Canada\u2019s federal government is hell-bent on introducing a nationwide foreign buyer tax.<\/p>\n<p style=\"text-align: justify;\">\u201cThere aren\u2019t any signs of speculation. The majority of transactions are for owner-occupied properties\u2014that\u2019s what we\u2019re seeing\u2014and we don\u2019t have foreign buyers,\u201d Woodhouse told CREW. \u201cWhy is it so hard to understand we haven\u2019t kept up with building housing? More Canadians are living alone than ever before. The notion of the Bank of Canada increasing interest rates to slow down the real estate market is laughable. That\u2019s a notion put forward by people incapable of doing math, because a quarter-point increase to the average mortgage, which is $400,000, raises it by $60.\u201d<\/p>\n<p style=\"text-align: justify;\">Woodhouse added that raising interest rates by 0.25-1% would spur even more activity in the housing market because buyers will begin thinking they\u2019ll be priced out of the market if they don\u2019t act fast. Unless the overnight rate is over 3%, market activity won\u2019t decelerate.<\/p>\n<p style=\"text-align: justify;\">The reason homes are selling like hotcakes is that non-essential outlays have drastically declined. Incapable of spending money on travel, expensive restaurants or on other entertainment, like sports game, Canadians are instead upgrading their living situations.<\/p>\n<p style=\"text-align: justify;\">\u201cCanadians have over $200 billion now in additional savings just sitting there,\u201d said Woodhouse, \u201cbecause they can\u2019t go out and eat, or to the movies, or on vacation. Go back to dual-income households\u2014two people still working in a two-bedroom condo, where they both need to be on Zoom meetings, is untenable for a year, and now they\u2019re being told they might have to spend another year living like that? They\u2019re selling and moving up. The market is being driven by fundamentals.\u201d<\/p>\n<p style=\"text-align: justify;\">The Bank of Canada will make an interest rate announcement on March 10, although there doesn\u2019t appear to be much indication that a rate hike is in the cards this week. Tiff Macklem noted that there are signs of \u201cexcess exuberance,\u201d but he doesn\u2019t appear ready to introduce cooling measures just yet.<\/p>\n<p style=\"text-align: justify;\">\u201cThe economy is weak, we are just coming out of the second wave, we need the growth we can get,\u201d BNN quoted Macklem. \u201cI think we need to watch things very closely but I\u2019m not recommending new measures right now.\u201d<\/p>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/www.canadianrealestatemagazine.ca\/news\/is-talk-of-an-overheated-housing-market-full-of-hot-air-334541.aspx\" target=\"_blank\" rel=\"noopener\">Is Talk of an Overheated Housing Market Full of Hot Air?<\/a> by Neil Sharma | Canadian Real Estate Wealth<\/p>","protected":false},"excerpt":{"rendered":"<p>Whispers of bubble conditions in Canada\u2019s housing market have become cacophonous of late and, consequently, the spectre of regulation has begun looming. \u201cBe on guard for macroprudential measures,\u201d Derek Holt, &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2021\/03\/overheated-housing-markets-with-further-increases-in-prices\/\">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-17541","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>Overheated Housing Markets with Further Increases in Prices &#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\/overheated-housing-markets-with-further-increases-in-prices\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Overheated Housing Markets with Further Increases in Prices &#8226; 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