Analysis: A cooling Canadian housing market still poses risks
By Andrea Hopkins
TORONTO (Reuters) - For the first time in three years, Toronto's sizzling housing market is showing signs of cooling, bringing a sigh of relief to David Fleming and other Canadian real estate agents who feared the market boom was getting out of control.
"It is a balanced market right now, where you don't have to make a decision with a gun to your head," said Fleming. He said the bidding wars of the past few years have evolved into mere skirmishes among prospective buyers.
But it may be too soon to sound the all-clear, some experts warn. What appears to be a gentle retreat right now could yet turn into a bruising rout.
A tightening of government-mandated mortgage rules that came into effect last week could begin a tipping point, keeping enough would-be buyers out of the market to trigger a freefall in prices, especially at the low end.
For the time being at least, most economists and realtors believe the soft landing that policymakers have sought to engineer is starting to take shape. The slowdown comes after a robust, three-year climb in Canadian home prices and booming construction of condominiums.
"The housing market is already slowing down and that's something that we know looking at numbers, sales activity and even prices," said Benjamin Tal, senior economist at CIBC World Markets.
"The recent change to regulations is really a gentle push in an already slowing market. And you always run the risk, when you push something that is already slowing, that you might make it fall," Tal said.
Mindful of the U.S. housing boom and bust that still plagues their southern neighbors, Canadians have taken up a collective gnashing of teeth over surging home prices and the correction they fear is right around the corner. Continued...