22 May 2014

“If you look at the market development during the previous few years, you’ll see it’s definitely heading to a soft landing,” – CMHC’s deputy chief economist Mathieu Laberge said.

In his opinion, there are no catalysts to cause a large crash in the market as some may believe. Laberge says such fundamentals as population, economic and employment growth, low mortgage rates and a wave of first-time buyers, will support the real estate market.

“If we compare those fundamentals to home prices, we’ll see quite a modest over-evaluation, which remains within historical norms.”

Moreover, CIBC analyst Benjamin Tal also shares this idea, suggesting there should be a certain trigger for a market crash. It could be a sharp mortgage rates increase, but we don’t expect this in the nearest future. The Bank of Canada has stepped away from its plans to raise rates soon, and many specialists predict the first rate hike only in spring 2016. Meanwhile, even then it will be small.


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