{"id":8079,"date":"2018-01-23T09:55:11","date_gmt":"2018-01-23T17:55:11","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=8079"},"modified":"2018-01-23T09:54:50","modified_gmt":"2018-01-23T17:54:50","slug":"is-canada-about-to-face-a-sharper-housing-correction","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2018\/01\/is-canada-about-to-face-a-sharper-housing-correction\/","title":{"rendered":"Is Canada About to Face A Sharper Housing Correction?"},"content":{"rendered":"<p style=\"text-align: justify;\">By now it\u2019s common knowledge that most economists are predicting a slower year for the Canadian housing market in 2018. But will things cool down more dramatically than they had initially thought? One Quebec-based credit union thinks so.<\/p>\n<p style=\"text-align: justify;\">\u201cIn Canada, the continuing gradual rise in interest rates is intensifying concerns over high household debt,\u201d writes the Desjardins economics team, in a recent report. \u201cThis could trigger a sharper housing correction than forecast, and a considerable slowdown in spending.\u201d<\/p>\n<p style=\"text-align: justify;\">Last week, the Bank of Canada hiked the overnight rate to 1.25%, causing the credit union to note that Canadians have some of the highest levels of household debt in the world.<\/p>\n<p style=\"text-align: justify;\">The interest rate hike \u2014 when combined with a new mortgage stress test for uninsured borrowers that came into effect on January 1 \u2014 could severely limit the purchasing power of many would-be home buyers, cooling the market dramatically.<\/p>\n<p style=\"text-align: justify;\">But while most economists agree that these factors will dampen the market in the first few months of 2018, many believe it will eventually adjust to the changes. What\u2019s more, some argue that Canadians debt levels aren\u2019t as worrying as they might first appear.<\/p>\n<p style=\"text-align: justify;\">\u201cHousehold debt in Canada is seen by some as unsustainably high and a source of vulnerability for the financial system,\u201d write National Bank chief economist St\u00e9fane Marion and senior economist Matthieu Arseneau in a recent report. \u201cBut the international evidence suggests that Canadian household leverage and home prices are not abnormal.\u201d<\/p>\n<p style=\"text-align: justify;\">According to Marion and Arseneau, Canada\u2019s level of household debt is matched by its strong economic fundamentals.<\/p>\n<p style=\"text-align: justify;\">\u201cOur analysis suggests that the ratio of household debt to disposable income in Canada is relatively conservative,\u201d they write. \u201cThis probably reflects the cumulative effect of all actions taken to mitigate the vulnerability of the financial system to household indebtedness.\u201d<\/p>\n<p style=\"text-align: justify;\">As for how sharp 2018\u2019s housing correction will be, Scotiabank\u2019s economics team has a guess \u2014 not very.<\/p>\n<p style=\"text-align: justify;\">\u201cHousing demand fundamentals, including low unemployment, strengthening wage gains, aging millennials and increased immigration remain supportive [of market growth],\u201d they write.<\/p>\n<p style=\"text-align: justify;\">Going into 2018, most local markets remain balanced, and are unlikely to drop into a deep buyers market for long.<\/p>\n<p style=\"text-align: justify;\">\u201cThe national average price growth is forecast to remain positive, albeit more subdued in the low single digits, with the majority of local market in balanced territory,\u201d writes the team.<\/p>\n<p style=\"text-align: justify;\"><a href=\"http:\/\/news.buzzbuzzhome.com\/2018\/01\/canada-face-sharper-housing-correction-economists-predicted.html\" target=\"_blank\" rel=\"noopener\">Is Canada About to Face A Sharper Housing Correction Than Economists had Predicted?<\/a> by Sarah Niedoba | Buzz Buzz Home<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By now it\u2019s common knowledge that most economists are predicting a slower year for the Canadian housing market in 2018. But will things cool down more dramatically than they had &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2018\/01\/is-canada-about-to-face-a-sharper-housing-correction\/\">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-8079","post","type-post","status-publish","format-standard","hentry","category-market-updates"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Is Canada About to Face A Sharper Housing Correction? &#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\/01\/is-canada-about-to-face-a-sharper-housing-correction\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Is Canada About to Face A Sharper Housing Correction? &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"By now it\u2019s common knowledge that most economists are predicting a slower year for the Canadian housing market in 2018. 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