Canadian Housing Market leading the way for the economy to rebound
Buying a home is one of the most important and exciting steps in your life…. Find the home you want now you need a mortgage. Deal with people who can offer you and your family the best options. Devin Cristo and Wes Will of Mortgage Now Inc. are Saskatoon Mortgage Experts. We have many years of experience helping individuals and families by offering mortgages from a variety of lenders. In our latest article, we share the latest news and forecasts about the Canadian housing market.
Canadian Housing Market 2018 forecast
The Bank of Canada (BoC) announced at the end of April 2018, that after a weak economic performance in the first quarter of 2018, it is predicting a rebound for the economy in the coming months.
“GDP growth in the first quarter was weaker than the Bank had expected but should rebound in the second quarter, resulting in 2 percent average growth in the first half of 2018,” reads the BoC announcement.
The weak first-quarter performance — which saw GDP growth fall sharply from 2.5 to 1.3 percent — has been widely attributed to a flagging housing market, as home sales dropped after the introduction of a new mortgage stress test on January 1.
“Slower economic growth in the first quarter primarily reflects weakness in two areas,” reads the Bank’s announcement. “Housing markets responded to new mortgage guidelines and other policy measures by pulling forward transactions in late 2017…Some of the weakness in housing…is expected to be unwound as 2018 progresses.”
According to BMO economist Benjamin Reitzes, the central bank’s more optimistic outlook for the second quarter reflects a belief that the housing market has adjusted to the new mortgage stress test, and will soon begin to recover.
“While Q1 GDP growth was cut sharply to 1.3 percent…Q2 was introduced at a very solid 2.5 percent, suggesting that the BoC is looking for some stability in housing over the coming months, at a minimum,” he writes in a recent note.
Reitzes also agrees that a warmer housing market is likely this spring. “We’re looking for a similar rebound in Q2, so can’t argue with that,” he writes.”
It’s a sentiment echoed by Scotiabank economist Marc Desormeaux, who believes that the housing market is on its way to bottoming out, and will see a surge in activity later in the year.
“March’s uptick in home purchases [of 1.3 percent] implies some bottoming out of sales activity, he writes, in a recent note. “Following the first-quarter contraction, we anticipate a modest but broad-based recovery in sales activity [in the second quarter.]”
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