Where the real estate market will go, it’s hard to predict. GTA home sales drop 39.5% in March, and data on house sales and pricing from the the Canadian Real Estate Association changes every time.
These are some considerations on whether or not house prices will fall:
- Besides Toronto and Vancouver, there are many places in Canada where house demand remains strong. Prices rise and fall and government policy can affect house hunters in the process, but buyers will adjust to a new reality as they get used to a market of ever-rising prices.
- Some houses in Toronto lay empty, when just in the last decade, owning a Vancouver or a Toronto house is profitable. Hilliard MacBeth, author and financial adviser, says that people may invest their money somewhere else, that will surge a downturn in the housing market.
- Sudden bursts of inflation might be subdued by the central bank. Recently, inflation has been tame, but inflation rises and falls in a cycle, depending on the factors that affect it.
- In today’s market, a sudden increase in interest rates would double the cost of interest payments. Even if our own central bank follows U.S. rates, there is still a lot of uncertainty on whether Northern American rates will rise fast or only moderately.
- Oil prices seem to be on the rise, but a rescue could come from oil-producing areas of Canada that has been lowering the prices since the 2014 oil slump.
- Canada Mortgage and Housing Corp. revealed that housing starts slowed in March. The rate of how many buildings a construction company can build could affect the value of existing homes, as this could result into a dip in prices.
- If buyers think that the economy is going bad, they will probably change their mind in buying a property. Economic commentators have observed a pattern where short-term interest rates exceed long-term rates might be signal that the economy is heading for recession, after a long period of economic growth.