Twice a year I produce a report called The Market Manuscript – a robust document that reviews the state of the new housing market in Canada, and I wanted to add some additional flavour to the first report this year by surveying the opinion of Canada’s top housing analysts on some of the hot-button issues influencing residential real estate. With questions of a housing market correction, and several reports suggesting Canadian housing is anywhere from 10 per cent to 63 per cent overvalued, I conducted a survey of the top 40 housing analysts in this country, and I asked them this question:
What is the probability of the average Canadian house price falling 20 per cent from 2014 levels over the next five years?
Fifty-six per cent of respondents felt the chance of a major housing market correction in Canada between now and 2020 was between one and 4.9 per cent, while six per cent of respondents felt it was less than one per cent. None of the respondents felt the probability was greater than 20 per cent. I did not track the individual responses, hoping the analysts would be as candid as possible.
You never know when the next global economic event will occur and influence house prices in our country, but it is reassuring to know that the people who track housing market activity for a living, think the chance of a housing market correction is very small.
The Market Manuscript includes forecasts for Toronto new condominium sales activity in 2015 as well, with the folks that cover the highrise market expecting another solid year. I posed a question to the top analysts that relates to the Toronto condo market, asking what they thought would happen with foreign investors if housing values began to decline domestically. Noneof the respondents felt that foreign owners treat their international real estate as a commodity and will sell when the prices are down, while the majority felt that foreign owners are long-term hold-and-rent investors and are not influenced by short-term price fluctuations.
I was pleasantly surprised that many of the responses given by the analysts aligned with my own, and I hope they give readers of this article more confidence in making that home purchase. I suggest reading as many expert opinions on the housing market as you can if you’re still on the fence about purchasing (may I shamefully plug my Market Manuscript as a great place to start).