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2180 Steeles Avenue West,
Suite 204, Concord,
ON, L4K 2Z5

Phone:     905-761-7001
Toll Free: 1855-761-7001
Fax:          905-761-7005

Email: mortgageadvisor@rogers.com

2 January 2017

Economists’ forecasts on Canada’s real estate market in 2017

Toronto housing market stays hot

According to James Laird, co-founder of RateHub, the GTA market will show the strongest performance this year. In his opinion, the main reason for that is the supply and demand issue. We don’t have enough detached and semi-detached houses on sale, while many potential buyers are looking for them, pushing prices even higher.

Sal Guatieri, senior economist at BMO Capital Research, believes the Toronto market will cool slightly, however, stay strong this year. “The prices will likely keep growing, although not by 20%. They are expected to show mid-single digits in Toronto.”

Vancouver market may cool down

In this case, economists have different opinions. For instance, Guatieri expects Vancouver prices to keep falling until this fall, continuing the trend started at the end of 2016. One of the reason for this downward tendency is the new tax for foreign homebuyers.

Meanwhile, Paul Taylor, president of the Mortgage Professionals of Canada, doesn’t share this idea. In his opinion, the problem is the market supply with the strong demand causing prices growth. “We’re talking about world-class cities: Vancouver is incredible and Toronto is a real financial hub.

In comparison to other global housing markets that we have in the same category, it will take more time to reach the value level, which will be comparable to those other cities”.

Other markets will show a cooling tendency or no changes at all

According to Taylor, the new mortgage rules will lead to a slight cooling at the real estate markets outside Toronto and Vancouver. Guatieri also believes that majority of Canadian housing markets will show healthy growth and a moderate prices increase.

Entering the real estate market will be quite difficult

Because of the latest mortgage rule changes first-time home buyers will lose almost 20% of their purchasing power.

“2017 may become the toughest year for a first-time home buyer in the previous ten years,” – noted James Laird. And here’s why:

The government cut the number of mortgages that could be insured, so financial institutions will have to compensate for the additional risk by making their borrowers pay more.

And, of course, one of the reasons is Donald Trump.

Donald Trump will affect Canada’s housing market

Donald Trump may indirectly lead to higher mortgage rates in Canada.

“Bond yields are growing sharply, leaving their previous record low level,” - said Laird. “Such a change was mostly caused by the Trump victory and some plans which he has started to release.”

It’s important to understand that higher bond yields mean higher borrowing costs for commercial banks. And those banks will definitely pass higher expenses to their borrowers. As a result, Canadian buyers may also see higher interest rates.

In case you’re planning to buy your first property during the next few months, we highly recommend getting a pre-approval today, when rates are still low. If you want to buy a house in spring, it’s better to do the same, as banks may hold today’s rates for you during four months.


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