Experts Cautiously Optimistic about Canadian Real Estate Market in 2015
Every New Year brings a new report on the housing sector. What will the real estate market do in 2015? Will it be the year where it cools off? Will the condo market go bust? What are the experts saying as we head into 2015?
There is good news
Real estate experts are “cautiously” optimistic heading into 2015. This is good news for home and business owners and investors. This seems to be in line with how people feel about the Canadian economy in general. People are cautious about how it will perform in the coming year.
Factors impacting the Canadian housing market
There are a number of factors in play that will have an impact on the housing market next year, namely the US economy and interest rates.
With the American economy experiencing its best job growth in eight years and with demand increasing in the housing market, this should help nudge the Canadian economy. According to BMO chief economist, Douglas Porter, in Experts cautiously optimistic for housing sector in 2015, “The average price of a home in Canada is 50 per cent higher than a home in the U.S., but that gap will narrow in the next 10 years.”
Interest rates are still low, one of the leading factors for new buyers entering the marketplace, even amid the new lending rules put into place by the CMHC in the past year. However, Porter does anticipate a modest increase in interest rates, but nothing that should erode the confidence of buyers. Overall, the housing market is solid, and you shouldn’t see any change in interest rates until after the first half of 2015.
First time home buyers are investing in the condo market in major urban areas
No surprise to anyone, the condo markets in the Greater Toronto Area and in other urban markets such as Vancouver will be the focus for first time buyers. With the average price for a new, single detached home being about $840,000, condos offer a more affordable option for buyers. This may lead to a slowdown in housing buys in the coming year.
"As affordability becomes an issue in urban centres, first-time buyers are looking towards condominiums both for lifestyle and for value," said Elton Ash, Regional Executive Vice President of RE/MAX of Western Canada, on newswire.ca
He adds, "Feeling the pressure from tightened CMHC lending criteria, many in this demographic delayed purchasing property in order to continue to save for their down-payment. The new mortgage rules will likely have less of an effect in the coming year as buyers adapt to the new regulations and make the necessary changes to meet the criteria."
Expect growth in 2015
Overall, Canadians can expect the housing market to grow. Canada's housing market is projected to increase 2.5% in 2015, according to RE/MAX.
"Canada's housing market is mirroring the resilience of our economy," said Gurinder Sandhu, EVP/Regional Director, RE/MAX INTEGRA | Ontario-Atlantic. "Housing demand is being supported by steady employment and immigration, while our GDP is expected to grow another 2.5 per cent in 2015. This is mitigating the effects of higher inventory, which many markets have been experiencing due to increased development."
Overall, it looks like 2015 will be some more of the same for the Canadian housing market.
Are you planning on investing in the housing market in 2015? Planning on buying a condo or detached home? What are your biggest concerns?
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