After three years of higher than average volatility, Canada’s housing market is forecast to stabilize over the next couple of years, but faces downward pressures as the economy improves.
A TD Economics report suggested that while an improving economy will generate modest income and job gains, economic growth will also increase the likelihood of rising interest rates. History suggests that higher rates have a stronger dampening effect on the housing market, however, with rates remaining at historical lows, the housing market is likely to remain relatively robust.
Recent changes to the regulation of residential mortgages insured by the Canada Mortgage and Housing Corporation may push home buyers to purchase before the new rules come into effect, but for the year, the bank is forecasting a “soft landing” with respect to any declines in home sales and new housing starts.
Housing starts began the year at an annualized level of 168,000 units with multiple unit starts at a “comfortable” level of 81,000 units. Single-unit homes started at the 64,000 unit level.