{"id":9125,"date":"2018-05-24T10:10:24","date_gmt":"2018-05-24T17:10:24","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=9125"},"modified":"2018-05-16T10:56:31","modified_gmt":"2018-05-16T17:56:31","slug":"how-to-make-sense-of-canadas-confusing-housing-market","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2018\/05\/how-to-make-sense-of-canadas-confusing-housing-market\/","title":{"rendered":"How to Make Sense of Canada&#8217;s Confusing Housing Market?"},"content":{"rendered":"<p style=\"text-align: justify;\">It\u2019s no secret that Canada\u2019s housing market has been on a wild ride lately. With reports stating that in some of the country\u2019s hottest markets, home prices are rising as sales are plummeting, some homebuyers and homeowners may be confused as to what it all means.<\/p>\n<p style=\"text-align: justify;\">\u201cAny time you have a supply constraint market where you can tell a compelling demand story, you get into a real confusion about how much these places are worth, especially when interest rates are low,\u201d Tom Davidoff, an associate professor and director of the Centre of Urban Economics and Real Estate at the Sauder School of Business at The University of British Columbia, tells Yahoo Canada Finance.<\/p>\n<p style=\"text-align: justify;\">\u201cHow much a three-bedroom or two-bedroom condo in a good location or okay location near Toronto or Vancouver is worth \u2014 that\u2019s a very hard valuation to do. There\u2019s a lot you have to know to be confident that you\u2019ve got the right number.\u201d<\/p>\n<p style=\"text-align: justify;\">It may be a fact more Canadians will soon have to face as home sales are picking up even in cities like Ottawa and Montreal.<\/p>\n<p style=\"text-align: justify;\"><strong>Concerns of a housing bubble<\/strong><\/p>\n<p style=\"text-align: justify;\">The state of the market has also sparked concerns about a possible housing bubble that could put Canada\u2019s economy in a tailspin.<\/p>\n<p style=\"text-align: justify;\">However Sal Guatieri, a senior economist and director of economic research at BMO Capital Markets, says he doesn\u2019t think there\u2019s concern for a housing bubble on a national level.<\/p>\n<p style=\"text-align: justify;\">\u201cWhen you move beyond Vancouver and Toronto, maybe a few other regions in British Columbia, Victoria, for example, valuations and affordability, are very healthy,\u201d he says.<\/p>\n<p style=\"text-align: justify;\">But Guatieri says last winter \u2014 late 2016, early 2017 \u2014 Toronto\u2019s housing market was likely in a bubble, citing signs of speculation driving up home prices more than 30%.<\/p>\n<p style=\"text-align: justify;\">\u201cWe were seeing a lot of investment, not only foreign buyers, but domestic buyers, a lot of speculation, lending of properties, that was a clear sign, along with the acceleration in prices, of a bubble,\u201d he adds. \u201cThat bubble has basically deflated now over the past year.\u201d<\/p>\n<p style=\"text-align: justify;\">Hilliard MacBeth, author of When the Bubble Bursts: Surviving the Canadian Real Estate Bubble Crash, believes some turbulent times are ahead for Canada and that the market correction is hitting different regions at different times.<\/p>\n<p style=\"text-align: justify;\">\u201cCompared to 1998 or 1999, house prices have basically tripled everywhere, and the differences are that the correction that we\u2019re now in started several years ago in Alberta,\u201d he says. \u201cIt\u2019s about a year old in Toronto. In single-family detached [homes] in Vancouver, it\u2019s about two years old.\u201d<\/p>\n<p style=\"text-align: justify;\"><strong>Differing views on prices<\/strong><\/p>\n<p style=\"text-align: justify;\">Part of the reason MacBeth believes we\u2019re seeing oddities in the market like few sales while prices are going up is because buyers and sellers have two different perspectives on what the price of a home should be.<\/p>\n<p style=\"text-align: justify;\">\u201cThe sellers are kind of stuck [at] what I call the \u2018anchor price.\u2019 They\u2019ve got a price in their mind that they just feel they deserve \u2014 basically the market owes me this price because a similar house sold two years ago at the peak for $4 million, and therefore I have to have $4 million,\u201d he says. \u201cThe buyers are becoming aware that there\u2019s a lot of inventory and prices are likely to drop more, so the buyers are just not willing to reach up to the seller\u2019s price, so you get very few sales.\u201d<\/p>\n<p style=\"text-align: justify;\">For Toronto and Vancouver in particular, Guatieri says, sales drops are due to a drop in demand due to the tougher mortgage rules, which has left fewer Canadians able to qualify for a mortgage, but for condos, the situation is complex, particularly in Toronto and Vancouver.<\/p>\n<p style=\"text-align: justify;\">\u201cWe\u2019re also seeing very lean levels of condos available for sale, both in the resale market and the new condo market, and this will slowly be resolved because we are seeing a record number of condos under construction,\u201d he says. \u201cWe could see condo prices, even if sales remain pretty soft, continue to rise for this year.\u201d<\/p>\n<p style=\"text-align: justify;\"><strong>Homebuyers take different strategies<\/strong><\/p>\n<p style=\"text-align: justify;\">With the market as wild as it is, Guatieri says that in some cases homebuyers are literally going the extra mile to make their home ownership dreams a reality.<\/p>\n<p style=\"text-align: justify;\">\u201cThey\u2019re buying basically the last affordable option, and that is condos or townhomes or else they are driving, commuting quite a distance and buying in the [suburbs] or far away from the core of the metropolitan region,\u201d he says. \u201cThe second thing they\u2019re doing, I believe, is they\u2019re just waiting. They are seeing detached home prices softening.<\/p>\n<p><a href=\"https:\/\/ca.finance.yahoo.com\/news\/buy-sell-stay-making-sense-canadas-confusing-housing-market-174424140.html?platform=hootsuite\" target=\"_blank\" rel=\"noopener\">Buy, Sell or Stay? Making Sense of Canada&#8217;s Confusing Housing Market<\/a> by Dexter Brown | Yahoo Finance<\/p>\n","protected":false},"excerpt":{"rendered":"<p>It\u2019s no secret that Canada\u2019s housing market has been on a wild ride lately. With reports stating that in some of the country\u2019s hottest markets, home prices are rising as &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2018\/05\/how-to-make-sense-of-canadas-confusing-housing-market\/\">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-9125","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>How to Make Sense of Canada&#039;s Confusing Housing Market? &#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\/05\/how-to-make-sense-of-canadas-confusing-housing-market\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"How to Make Sense of Canada&#039;s Confusing Housing Market? &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"It\u2019s no secret that Canada\u2019s housing market has been on a wild ride lately. 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