Homeowners can't expect double-digit gains in value of property, Scotiabank economist says
Toronto will see fewer bidding wars in the next year or two as the housing market cools and affordability pinches budgets, according to a new economic forecast issued today.
Homeowners in the Toronto area can no longer expect double-digit gains in the value of their homes, according to Adrienne Warren, senior economist for Scotiabank. "It's going to be a good year, but not a great year in the Canadian housing market," she said at a conference in Toronto.
"We're not going to see the same tight conditions that we have seen in recent years. There is certainly is a lot more supply out there right now. We would say for consumers to look for buying opportunities. The market is cooling off as a result of the slowing economy and reduced affordability."
Warren said that price increases for Toronto are forecast to average in the 3.5 per cent area while the main centre of strength continues to be in the western provinces.
"We're not going to see 10 per cent-plus price increases every year," Warren said. "Things will probably be cooling off for the next few years."
Canada's housing boom, which is going into its 10th year, has been the longest and strongest of the post-war era, according to Warren. The market in Toronto will likely turn into a buyer's market by 2009, according to the forecast. Forecasters believe the Canadian market peaked in the last quarter of 2007.
The report says part of the cause is declining affordability - especially for first-time buyers. But there are also risks associated with the U.S. slowdown.
"There could be an economic spillover from the U.S.," said Warren. "The risk is that we see a bigger slowdown in the U.S. in the coming year as a result of the weakening of the housing market and to some extent in consumer spending."
Ontario and Quebec appear most vulnerable, because of their reliance on manufacturing. But despite the U.S. conditions, the risks are low that this country will see the steep price declines currently being experienced across the U.S., according to Warren.
For one thing, Canadian households are generally not over-leveraged, something the U.S. sub-prime mortgages helped encourage south of the border. arren says that Canadian households have little direct exposure to the sub-prime lending crisis, which has led to the downturn in the U.S. Sub-prime mortgage activity accounts for more than 20 per cent of mortgages in the U.S., but only about 5 per cent of the mortgage market in Canada.
"Inventories of unsold homes, including condominiums, in Canada's major centres are well contained," the author said. Warren pointed out that new mortgage products with extended amortization periods, which effectively lower monthly payments, appear to be a key factor in the ongoing demand. Toronto Star
While this is being circulated by the Toronto Star, we have had an unseasonably colder and snowier winter that has kept people inside. Demand for Neighbourhoods like The Kingsway and Markland woods will indeed push for more multiple offer situations, as more buyers are seeking the same properties.
Here are a few tips about dealing with Multiple Offer Situations and ediquette.