Month: July 2020

Sustained market strength, subject to supply constraints, will be the predominant dynamic in the Canadian housing sector for the rest of the year, according to Royal LePage CEO Phil Soper and Sotheby’s Canada CEO Don Kottick.

In a joint interview with The Financial Post, the two executives highlighted the major role that housing inventory will play in the period immediately after the COVID-19 pandemic eases.

Soper said that home prices largely rely on the balance between supply and buyer activity.

“There are a lot of people who are looking to put roofs over their heads,” Soper said. “We just don’t see the number of homes for sale, the supply side of this, climbing to the point where home prices will collapse.”

Royal LePage’s latest predictions have placed annual growth by year-end at 2.5%.

“It’s about half the long-term rate of home price appreciation we’ve seen in Canada, so we’re not talking about a great year – but it’s far, far from the doom and gloom that some of those who are not as close to the market [as us] have prophesized,” Soper said.

Kottick said that the Bank of Canada’s current record-low key interest rate will also feed into this trend, thus keeping the market afloat.

“The Bank of Canada mentioned that it is highly unlikely to touch interest rates until 2023, so the money is going to be a lot more affordable for the foreseeable future,” Kottick said. “And that was always a concern: ‘When we come out of this, is the government going to increase interest rates?’ Which will have an adverse effect. So that’s one dynamic that has been kind of answered until 2023. I think that will add a lot of confidence to the market.”

The question of supply should be in policymakers’ minds even long after the outbreak has passed, Kottick said.

“We have never addressed the supply issue in Canada, and I think we’re seeing the impact of [the fact] that supply has never been increased,” Kottick said. “When you look at the global environment, I think this [crisis] has put the spotlight on Canada as being a global destination. We’ve been getting calls from our affiliates all over the world – India, the Asia-Pacific region, the Middle East – and they all want to expose their markets to us. I think there might be a drop in immigration, but I think the government understands the need for immigration so it is going to be ramped up. I think we’re going to see a surge of people who want to come to Canada.”

Soper echoed these sentiments, saying that as a premier destination, Canada will likely see intensified demand from inbound populations.

“The solution is the supply side, and it’s not going to get addressed in a piecemeal fashion,” Soper said. “When we come out of this, the new normal is going to have to focus on health, education, and housing as major national priorities that align federal, provincial, and municipal governments to providing enough for our growing population.”

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate

Sustained market strength, subject to supply constraints, will be the predominant dynamic in the Canadian housing sector for the rest of the year, according to Royal LePage CEO Phil Soper and Sotheby’s Canada CEO Don Kottick.

In a joint interview with The Financial Post, the two executives highlighted the major role that housing inventory will play in the period immediately after the COVID-19 pandemic eases.

Soper said that home prices largely rely on the balance between supply and buyer activity.

“There are a lot of people who are looking to put roofs over their heads,” Soper said. “We just don’t see the number of homes for sale, the supply side of this, climbing to the point where home prices will collapse.”

Royal LePage’s latest predictions have placed annual growth by year-end at 2.5%.

“It’s about half the long-term rate of home price appreciation we’ve seen in Canada, so we’re not talking about a great year – but it’s far, far from the doom and gloom that some of those who are not as close to the market [as us] have prophesized,” Soper said.

Kottick said that the Bank of Canada’s current record-low key interest rate will also feed into this trend, thus keeping the market afloat.

“The Bank of Canada mentioned that it is highly unlikely to touch interest rates until 2023, so the money is going to be a lot more affordable for the foreseeable future,” Kottick said. “And that was always a concern: ‘When we come out of this, is the government going to increase interest rates?’ Which will have an adverse effect. So that’s one dynamic that has been kind of answered until 2023. I think that will add a lot of confidence to the market.”

The question of supply should be in policymakers’ minds even long after the outbreak has passed, Kottick said.

“We have never addressed the supply issue in Canada, and I think we’re seeing the impact of [the fact] that supply has never been increased,” Kottick said. “When you look at the global environment, I think this [crisis] has put the spotlight on Canada as being a global destination. We’ve been getting calls from our affiliates all over the world – India, the Asia-Pacific region, the Middle East – and they all want to expose their markets to us. I think there might be a drop in immigration, but I think the government understands the need for immigration so it is going to be ramped up. I think we’re going to see a surge of people who want to come to Canada.”

Soper echoed these sentiments, saying that as a premier destination, Canada will likely see intensified demand from inbound populations.

“The solution is the supply side, and it’s not going to get addressed in a piecemeal fashion,” Soper said. “When we come out of this, the new normal is going to have to focus on health, education, and housing as major national priorities that align federal, provincial, and municipal governments to providing enough for our growing population.”

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate

Some unspecified “new tools” might be needed to help homeowners get through the COVID-19 pandemic once federal financial aid programs end, according to the Canada Mortgage and Housing Corporation.

“As the end of the initial six-month deferral period from the beginning of the pandemic approaches, we recognize the need to continue to monitor this diligently and potentially develop new tools with our partners to help Canadians during this unprecedented pandemic,” CMHC said in a statement to The Financial Post. “This work is ongoing and we will provide Canadians with updates as they become available.”

A recent survey by the Canadian Credit Union Association has noted that CMHC might consider extending amortization and amortization periods, implementing special payment arrangements, and/or adding missed payments to mortgage balances.

The CCUA study found that at least 78.79% of credit unions approve of the “expansion” of these policy tools.

The support stemmed from the fact that a significant portion of the financial institutions surveyed did not consider the current mortgage deferral period as “sufficient,” said Michael Hatch, vice president of government relations for the CCUA.

The Crown corporation is “looking at what the options might be from that angle and we hope that they’re able to put something together soon because that timeline is approaching,” Hatch said.

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate