Aug 28, 2017
Coming in for a Soft Landing: TD Economics
Questions about Canada's housing market abound and TD Economics seeks to answer some of them in a report entitled Canadian Regional Housing Outlook: Navigating a Soft Landing. In their research, Economists Beata Caranci and Diana Petramala consider the impacts of regulatory changes, foreign investment, population growth and interest rates on the housing market, and whether a soft landing is in our future.
- More federal regulatory changes to housing policy are yet to come but with each successive round, the impact has had a smaller impact on home buying activity. However, as federal changes become less effective, those implemented at the provincial level continue to pack a punch. Since Ontario instituted its policy measures, existing homes sales have dropped 33%, with Toronto falling by 44%.
- Mortgage-holders have some room to absorb higher interest rates. While Canadians have taken on record levels of debt for the purchase of relatively expensive homes, low interest rates have allowed mortgage-holders to pay down principal at an accelerated rate.
- Buyers waiting on the sidelines for a crash should not hold their breath. Signs point to prices only resetting back to levels that existed prior to a year of outsized gains: the increase in listings is due to speculative activity being squeezed out by policy measures, not because of unaffordability or financial strain in the market, and mortgage delinquency rates are at a near record low.
For more information and analysis, click here for the full TD Economics report.
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