Thursday, June 20, 2013

Canada’s impending housing collapse not in sight

OTTAWA — Not so fast. The purported collapse of Canada’s housing market does not appear to be in sight, and any correction down the road could likely be a mild one.

Recent data have defied warnings from market watchers of an impending plunge — caused mainly by the impact of tighter mortgage rules imposed by the federal government last summer to slow the race by consumers for record-low lending rates.

The latest figures show sales of existing homes strengthened for a second month in May, up by a seasonally adjusted 3.6%, after declining 10% between July and March.

The Canadian Real Estate Association, in a report Monday, also said home prices were up 3.7% in May from the same month a year earlier, to a national average of $388,910.

For all of this year, CREA pegs the average price rise at 2.1%, to $370,900, weaker but far removed from correction territory. And in 2014, the average value is expected to rise 1.8% to $377,700, the Ottawa-based industry group said.

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“Prices remain stable, perhaps maddeningly so for the legions of bubble mongers,” said Douglas Porter, chief economist at BMO Capital Markets.

Mr. Porter noted the May data show “housing remains on track for a fabled soft landing … making a mockery of talk of an imminent collapse.”



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