Real Estate

3 Reasons Canadian Housing Will Roar in 2018

  • Last Updated:
  • Oct 19th, 2017 3:15 pm
[OP]
Deal Addict
Jun 29, 2007
3647 posts
777 upvotes

3 Reasons Canadian Housing Will Roar in 2018

http://www.msn.com/en-ca/money/topstori ... spartandhp

The real estate industry received some long overdue good news from the Toronto Real Estate Board, as home prices climbed 6%, representing the first monthly increase since the slide began in April. The housing correction that began when Ontario instituted a set of new regulations, including a 15% foreign buyers’ tax, has caused house prices to slip almost 20% since the peak in April of this year.

Home Capital Group Inc.(TSX:HCG) also played a large part in souring investor sentiment. The crisis sparked a sell-off in other alternative lenders, like Equitable Group Inc.(TSX:EQB) and mortgage insurers like Genworth MI Canada Inc.(TSX:MIC). After a tumultuous spring and summer, Canada housing has shown signs that it may be ready for a significant bounce back in the coming months.
CMHC is set to explore loosening of regulations
The Canadian Mortgage and Housing Corporation (CMHC) is reportedly mulling regulatory changes to make it easier for small-business owners to qualify for new mortgages. Current mortgage regulations have stringent income stipulations that force small-business owners, contractors, and other non-salaried workers to qualify based on a two-year average. This can be especially complicated for younger workers in contract work, which is becoming more prevalent in the so-called gig economy.
Intuit Canada released a study in January in which it projected self-employed Canadians will make up 45% of the workforce in 2020. If and when these regulations are loosened to adapt to the new working environment, it could entice many new prospective buyers.
New construction and real estate investment continues at a record pace
Toronto and its surrounding cities saw an incredible rise in the first third of 2017. Hamilton, Ontario, was of particular interest as a city undergoing a transition into an affordable landing spot for those priced out of Toronto. On September 29, Hamilton surpassed the $1 billion mark when it came to construction investment in the city. This represents the fastest growth in investment in the city’s history.
RioCan Real Estate Investment Trust(TSX:REI.UN) announced that it plans to pursue a $2 billion sale of its holdings in secondary markets and focus more on commercial and residential properties in major cities.
Immigration is set to rise in 2018
Canadian immigration minister Ahmed Hussen indicated that immigration levels may increase in 2018 from the already record levels of 300,000 per year seen in 2015 and 2016. Some experts are predicting a rise in the 310,000-320,000 range.
Immigration from outside Canada into Ontario was the highest reported in five years in 2016. Immigration also remains one of the main sources of population growth in the city of Toronto, both from outside and inside Canada. There is still debate over how immigration has impacted demand, but the continuing surplus should yield positive results for the market.
Investors in housing and alternative lenders should also take solace in the recent comments by the Bank of Canada following the September 6th rate hike. Governor Stephen Poloz has assured that the bank will proceed with caution, which seems to indicate a gradual approach to rising interest rates. This should help lenders and the industry at large keep borrowing costs low.

Fool contributor Ambrose O'Callaghan has no position in any stocks mentioned.
8 replies
Newbie
Sep 25, 2017
22 posts
7 upvotes
Is writer Ambrose O'Callaghan a P/T realtor?
Deal Expert
User avatar
Apr 21, 2004
40167 posts
9431 upvotes
Still awaiting loller for the buy signal on an investment property.
Newbie
Oct 8, 2017
10 posts
3 upvotes
Hmmmm.

How can it 'roar' with rising rates and new foreign taxes? Is this a thread pumping up RE? LOL!

This is why I'm still going to rent for the next few years.
Sr. Member
User avatar
Dec 13, 2016
940 posts
727 upvotes
HanSin wrote:
Oct 12th, 2017 9:57 pm
Hmmmm.

How can it 'roar' with rising rates and new foreign taxes? Is this a thread pumping up RE? LOL!

This is why I'm still going to rent for the next few years.
Condos in bangkok are approaching 15,000 per square meter while interest rates are around 4% and the average salary is $1000 a month.

Oh yes....it will go through the roof and the only way the bubble will stop is when the market collapses.
Deal Fanatic
User avatar
Jun 26, 2005
7278 posts
144 upvotes
it already roared in 2017 no?

The title should be "prices will continue to rise" as it always has been.
[OP]
Deal Addict
Jun 29, 2007
3647 posts
777 upvotes
All the people down voting don't like the optimism?
That's what makes a market. People who think it's going to go down while others think it's going to go up. Place your bets, or standby and watch from the sideline until the dust settles.

Here is a recent story taking the opposite position:

https://www.bloomberg.com/news/articles ... st-exposed
Eisman of ‘The Big Short’ Warns Canada Housing Heading for Slump With CIBC Most Exposed
By Maciej Onoszko
October 16, 2017, 7:01 AM PDT

Canada’s housing market is “ripe for a pretty severe correction” with Canadian Imperial Bank of Commerce the most vulnerable, according to Steve Eisman, a fund manager at Neuberger Berman Group LLC.
Last edited by Speedy1 on Oct 19th, 2017 1:26 pm, edited 1 time in total.
Sr. Member
Jan 17, 2006
553 posts
264 upvotes
Toronto
Speedy1 wrote:
Oct 19th, 2017 1:26 pm
All the people down voting don't like the optimism?
That's what makes a market. People who think it's going to go down while others think it's going to go up. Place your bets, or standby and watch from the sideline until the dust settles.

Here are 2 recent stories taking the opposite position:

1) http://www.bnn.ca/real-estate/video/van ... ist~987550

Vancouver home prices could drop 5-10% in next 6 months: Strategist
Myles Zyblock, Chief Investment Strategist at Dynamic Funds says it wouldn't be a stretch to see Vancouver home prices go down by five to 10 per cent in the next six months.

2) https://www.bloomberg.com/news/articles ... st-exposed
Eisman of ‘The Big Short’ Warns Canada Housing Heading for Slump With CIBC Most Exposed
By Maciej Onoszko
October 16, 2017, 7:01 AM PDT

Canada’s housing market is “ripe for a pretty severe correction” with Canadian Imperial Bank of Commerce the most vulnerable, according to Steve Eisman, a fund manager at Neuberger Berman Group LLC.
Eisman has been shorting Canada's RE since 2013, looks tired a bit from it, but still waiting for it.

2013 article
https://www.cnbc.com/id/100726168

and first link from bnn from November 2016, thanks for fresh outlook.
[OP]
Deal Addict
Jun 29, 2007
3647 posts
777 upvotes
ilim wrote:
Oct 19th, 2017 2:05 pm
Eisman has been shorting Canada's RE since 2013, looks tired a bit from it, but still waiting for it.

2013 article
https://www.cnbc.com/id/100726168

and first link from bnn from November 2016, thanks for fresh outlook.
Thanks for pointing out the BNN Nov, 2016 story. I removed it from my post.

Top