{"id":9599,"date":"2018-07-05T08:08:43","date_gmt":"2018-07-05T15:08:43","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=9599"},"modified":"2018-07-05T10:23:25","modified_gmt":"2018-07-05T17:23:25","slug":"when-will-the-canadian-housing-market-finally-adjust-to-new-mortgage-stress-test-rising-interest-rates","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2018\/07\/when-will-the-canadian-housing-market-finally-adjust-to-new-mortgage-stress-test-rising-interest-rates\/","title":{"rendered":"When Will The Canadian Housing Market Finally Adjust to New Mortgage Stress Test &#038; Rising Interest Rates?"},"content":{"rendered":"<p style=\"text-align: justify;\">The first quarter of 2018 was dominated by economic forecasts calling for a rough first quarter for the Canadian housing market, followed by a recovery in the spring.<\/p>\n<p style=\"text-align: justify;\">But spring has come and gone, and Canadian home sales are still slumping on a year-over-year basis, while prices in most markets remain stubbornly flat.<\/p>\n<p style=\"text-align: justify;\">While provincial housing policy and a rising interest rate environment have a role to play in the market\u2019s slumping performance, most economists blame a new mortgage stress test introduced on January 1 for the current state of affairs.<\/p>\n<p style=\"text-align: justify;\">So when will the market finally adjust to said test? It depends who you ask.<\/p>\n<p style=\"text-align: justify;\">The first quarter of 2018 was dominated by economic forecasts calling for a rough first quarter for the Canadian housing market, followed by a recovery in the spring.<\/p>\n<p style=\"text-align: justify;\">But spring has come and gone, and Canadian home sales are still slumping on a year-over-year basis, while prices in most markets remain stubbornly flat.<\/p>\n<p style=\"text-align: justify;\">While provincial housing policy and a rising interest rate environment have a role to play in the market\u2019s slumping performance, most economists blame a new mortgage stress test introduced on January 1 for the current state of affairs.<\/p>\n<p style=\"text-align: justify;\">So when will the market finally adjust to said test? It depends who you ask.<\/p>\n<p style=\"text-align: justify;\">\u201cWe held the view until now that the transitory effect of the stress test implemented on January 1 would start to wane by the spring,\u201d wrote senior economist Robert Hogue, in a note earlier this month. \u201cWell, there was no indication of any material rebound in home resale activity through May.\u201d<\/p>\n<p style=\"text-align: justify;\">Hogue writes that while he had initially predicted that home sales would drop by 4.3% year-over-year in 2018, that number could double by the end of the year.<\/p>\n<p style=\"text-align: justify;\">Meanwhile, Scotiabank senior economist Marc Desormeaux is predicting that a recovery is still on the way, just later in the year.<\/p>\n<p style=\"text-align: justify;\">While in April he wrote that sales appeared to be \u201cbottoming out\u201d and that following the first quarter contraction he predicted a \u201cmodest but broad-based recovery of sales activity [in the second quarter],\u201d he is now predicting that the recovery will happen later in the summer.<\/p>\n<p style=\"text-align: justify;\">\u201cAn early-year slowdown in Canadian housing market activity persists in the wake of rising interest rates and mortgage stress tests that came into effect on Jan. 1st,\u201d he writes, in a recent note, before predicting a \u201cmodest recovery &#8230;.. later in 2018.\u201d<\/p>\n<p style=\"text-align: justify;\">Not every economist is adjusting their forecast. TD economist Rishi Sondhi wrote in a recent note that May\u2019s sales numbers largely matched his earlier predictions.<\/p>\n<p style=\"text-align: justify;\">\u201cOn balance, this was a better-than-expected report,\u201d he wrote of May\u2019s sales numbers, in a recent note. \u201cAll told, the figures support the notion that markets are stabilizing after significant volatility in the early part of the year related to the implementation of updated [mortgage rules].\u201d<\/p>\n<p style=\"text-align: justify;\">Sondhi adds that impacts from mortgage rule changes tend to be \u201crapid, but also transitory,\u201d which means a recovery could be around the corner.<\/p>\n<p style=\"text-align: justify;\">\u201cGoing forward, we expect activity to find support and begin to recover very gradually in the second half of the year,\u201d he writes. \u201cWhile rising borrowing costs will weigh on activity and prices, the housing market should nonetheless improve, supported by low unemployment, rising wages, and healthy population growth.\u201d<\/p>\n<p style=\"text-align: justify;\"><a href=\"http:\/\/news.buzzbuzzhome.com\/2018\/06\/economists-predicted-canadian-housing-market-warm-spring-heres-theyre-saying-now.html\" target=\"_blank\" rel=\"noopener\">Economists Predicted That The Canadian Housing Market Would Warm Up by Spring &#8211; Here&#8217;s What They&#8217;re Saying Now<\/a> by Sarah Niedoba | Buzz Buzz Home<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The first quarter of 2018 was dominated by economic forecasts calling for a rough first quarter for the Canadian housing market, followed by a recovery in the spring. But spring &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2018\/07\/when-will-the-canadian-housing-market-finally-adjust-to-new-mortgage-stress-test-rising-interest-rates\/\">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-9599","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>When Will The Canadian Housing Market Finally Adjust to New Mortgage Stress Test &amp; Rising Interest Rates? &#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\/07\/when-will-the-canadian-housing-market-finally-adjust-to-new-mortgage-stress-test-rising-interest-rates\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"When Will The Canadian Housing Market Finally Adjust to New Mortgage Stress Test &amp; Rising Interest Rates? &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"The first quarter of 2018 was dominated by economic forecasts calling for a rough first quarter for the Canadian housing market, followed by a recovery in the spring. 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