Here is a summary of their report and my comments follow...
1. The record surge in resale volumes reflects unleashing pent-up demand.
2. Existing home sales might already be starting to stabilize, and at levels below their past peaks.
3. Double decade extreme spike in prices is less of a concern because average existing home prices are a flawed measure.
4. New home prices have begun to incrementally increase but still remain 2.7% below year-ago levels.
5. Mortgage credit growth has also been decelerating, not accelerating, and remains well below pre-crisis double-digit peaks.
6. Thus the only truly concerning aspect of current conditions in the resale market is the level of prices.
Bottom line:
Canada's resale market metrics are stoking fears of a housing bubble, but the fears for them most part are unfounded. It's not a bubble when a record sales rebound follows a massive sales collapse, owing to the vagaries of pent-up demand. It's not a bubble when prices accelerate because growing demand is butting up against shrinking supply. It's not a bubble simply because relative prices are at record heights. Furthermore, given that mortgage credit growth is moderating, and new home and land prices remain subdued, the evidence on the ground argues against a housing bubble.
My comments:
What I am seeing out there right now that I don't like is the fever of multiple offers causing buyers to grossly over pay. I advise my clients against it, even if it means losing a few offers to get to the right home at the right value.
Lack of inventory is definitely plumping things up a bit in certain market segments.
What I would like to see in the spring market to feel confident about continuous healthy growth is better inventory, which should lead to reasonable market values and better balance between sellers and buyers.
And buyers who are playing it smart, thinking long term and considering future interest rate rises when considering their purchase.
For the full BMO Nesbitt Burns report, click here.
No comments:
Post a Comment