Canada’s Hot Housing Market Expected to Cool
After a long housing boom in Canada, prices are expected to slip and then stagnate in the next few years according to a new report from Scotiabank released yesterday. The greatest effect will probably be felt in the hot Toronto and Vancouver housing markets that have already seen signs of a cool down. Last month Vancouver home sales saw their lowest point in ten years.
Economists are largely agreeing that Canada will not be seeing a similar downturn as what happened in the United States, but should expect a similar stagnant period as occurred after the housing booms of the 1970s and 1980s in Canada.
The Scotiabank report projects a cumulative 10-percent drop in house prices to occur over the next two or three years, followed by a period of stagnation of about a decade. This sort of effect will allow for affordability to become gradually restored as incomes catch up and demand is eventually restored.
The federal government has made several efforts to slow the housing market in Canada in order to avoid what happened in the US, the most recent of which came into effect last month. Tighter mortgage regulations are expected to affect the housing market, though if long-term effects of these rules include avoiding a housing crash like in the US, these regulations should be seen as a positive for Canada. The most drastic dip or stagnation in prices are expected in the very hot Vancouver and Toronto markets, with the market in those cities leveling out to more reasonable rates.