Overpriced and Overbuilt: Canadian Housing Market Returns to Fundamentals: TD

Released yesterday by TD Economics, this report on Canadian housing.

Looking back on the boom in Canadian home building from 2002 to 2008, it is now clear that unsustainable price increases drove unsustainable levels of building. This overbuilding will weigh on markets over at least the next three years. Even as Canada recovers from the cyclical downtown, house prices will only rebound sluggishly and new residential construction will remain depressed, owing to this structural weakness. While newly built houses were being rapidly purchased by new homeowners during the housing boom, our view is that house prices exceeded the value of housing that was justified by fundamentals by approximately 9% nationwide during 2004-2008…particularly on the Canadian prairies.

Overpriced and Overbuilt: Canadian Housing Market Returns to Fundamentals: TD

Thank you to Crikey for the heads up.

I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

Follow our daily updates on Twitter @Norm_Fisher.

Norm Fisher
Royal LePage Saskatoon Real Estate

Canada’s housing boom ends…again

Canada’s housing boom has ended for the second time since Douglas Porter; deputy chief economist at BMO Nesbitt Burns officially declared it “over” in mid-April. Stay tuned for further endings as we move through summer and into the fall. 🙂


In a report released this week by TD Economics, economists Craig Alexander and Pascal Gauthier said, “The long-awaited end of the Canadian housing boom has occurred, reflecting more moderate demand and increased supply of properties for sale.”


In May, year-over-year price gains for existing home sales in Canada’s major markets fell to 1.1%, down from 8.6% just four months ago.


The report says that the cooling market is “nowhere as evident as in Alberta, with prices continuing to fall this year by eight to ten per cent from their peak.”


“The combination of significantly higher listings, reflecting the desire of homeowners to take advantage of the past increase in prices, and weaker demand, due to the past erosion in affordability, are leading to declining sales and softer price performance across the country, particularly in the west.”


“…Saskatchewan’s major markets offer an exception to the cooling trend on an annual basis, but this is mostly a question of timing. The price surge above 30% growth came late last year and much of the momentum is being carried into this year. But, if Regina and Saskatoon follow the path just recently threaded by Calgary and later Edmonton – and we think they will – Saskatchewan’s price growth will have come back down to earth by early next year. We are looking for 2-3% price growth in 2009, with a risk of a mild price correction.”


Not to be outdone, BMO economist Douglas Porter was quoted as saying, “Hey, I called it first!”


Well, not really, but he did throw this little gem forward in an interview with the Globe and Mail on June 27.


“It’s a bit unnerving to see how Canadian performance is beginning to look like that of the U.S. two years down the line.”


As disturbing as it is to see a “deputy chief economist” write reports in Comic Sans font, you have to admit that his graph is rather compelling.


“There is a litany of reasons why the Canadian market is different, but even a pale version of what we saw in the U.S. would not be good news,” said Porter.


The First “End” of Canada’s Housing Boom

TD Economics – Canada’s Housing Boom Comes to an End

Star Phoenix – Canada’s housing boom ends

Star Phoenix – National housing boom has come to an end

Globe and Mail – Housing Drop Looming in Canada?

I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

Follow our daily updates on Twitter @SaskatoonHomes.

Norm Fisher
Royal LePage Saskatoon Real Estate

Saskatchewan real estate on fire: TD Economics

Saskatchewan real estate on fire: TD EconomicsA TD Economics “Housing Market Commentary” released yesterday describes Saskatchewan’s real estate market as “on fire” and forecasts the province as the home price growth leader across the nation for 2007 and 2008. TD is predicting increases of 28% in 2008 and 11.3% in 2009 which would make Saskatchewan the only province to experience double digit gains in either of the two years.


The report focuses on the growth of the average home price in Canada which has experienced double digit gains for three consecutive years, largely driven by massive increases in western Canada, and more specifically, Alberta. Going forward, TD says, “We expect Alberta’s home prices to grow close to par with the national average in 2008 and to underperform in 2009. And while Saskatchewan in currently on fire, it will likely follow a similar path in about 12 months time.”


What’s missing from this report is the “why?” No detailed analysis is provided to back forecasts which differ substantially from reports issued by RBC and Scotiabank who both described Saskatoon as “overvalued.”


Read the TD Economics Housing Market Commentary here

Read also: Saskatoon and Edmonton homes most overvalued

Read also: Is Saskatoon overvalued? Another economist says “yes”

I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

Follow our daily updates on Twitter @SaskatoonHomes.

Norm Fisher
Royal LePage Saskatoon Real Estate

TD predicts interest rate hikes for July and September

“While the Bank of Canada elected to leave its key lending rate unchanged at 4.25%, it will likely be the last time the central bank does so for a little while. In acknowledging that both economic growth and inflation has exceeded its expectations, the Bank explicitly stated that “some increase in the target for the overnight rate may be required in the near term to bring inflation back to target.” This statement blows open the door to what we believe will be the first of two 25 basis point increases in the overnight rate starting at the Bank’s next Fixed Announcement Date (FAD) on July 10th.”


Read the full data commentary here

I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

Follow our daily updates on Twitter @SaskatoonHomes.

Norm Fisher
Royal LePage Saskatoon Real Estate