Stephen Dupuis – Yourhome​.ca

It was a great sum­mer for home build­ing as well as home buy­ing, notwith­stand­ing the unusu­ally high num­ber of stud­ies and reports by finan­cial insti­tu­tions and think tanks mak­ing wild pre­dic­tions about the trend line for home sales and prices.

Pre­dictably, the reports that got the most ink were the ones fore­cast­ing doom and gloom, while the more bal­anced views of agen­cies like Canada Mort­gage and Hous­ing Corp. went largely unreported.

It’s true but not sur­pris­ing that hous­ing sales have eased off from the euphoric lev­els posted dur­ing the recov­ery phase fol­low­ing the global eco­nomic cri­sis, but the mar­ket is still hum­ming along, albeit at a more sus­tain­able pace. New home sales through the first seven months of this year are run­ning 44% ahead of last year. Mean­while, the lowrise and high­rise price index is up 10% and 9.2% respec­tively, year over year.

Accord­ing to the Third Quar­ter CMHC Hous­ing Mar­ket Out­look, exist­ing home sales will mod­er­ate from peak lev­els, as we are see­ing, but will sta­bi­lize by the early part of 2011, which is just around the cor­ner. “Improved afford­abil­ity will boost sales later in 2011,” CMHC says.

As for resale home prices, CMHC pre­dicts the same pat­tern with prices sta­bi­liz­ing later this year. “Recov­er­ing demand will boost prices through 2011,” the agency’s news release adds.

CMHC notes that demand for sin­gle detached homes will weaken in “pricier Ontario mar­kets” while ris­ing car­ry­ing costs will boost demand for con­dos. I read that to mean that prices are going up, not down, with buy­ers shift­ing to more afford­able unit types in response.

George Car­ras, pres­i­dent of Real­Net Canada Inc., has cer­tainly found evi­dence of that mar­ket shift, not­ing that the fastest mov­ing prod­uct types these days are town­homes, stacked town­homes, midrise apart­ments and high­rise con­dos, with an increas­ing pro­por­tion of the lat­ter being recorded in the 905 regions. In a word, afford­abil­ity is dri­ving the mar­ket, as it always does.

As for those think tank reports, if you are among those read­ers who bought into the Cana­dian Cen­tre for Pol­icy Alter­na­tives report that we have a hous­ing price bub­ble that is about to burst, you should also read the C.D. Howe Insti­tute report titled Not Here — Hous­ing Mar­ket Pol­icy and the Risk of a Hous­ing Mar­ket Bust, posted at cdhowe​.ca.

Com­ment­ing on the CCPA report in an inter­nal newslet­ter to builders, BILD’s eco­nomic advi­sor, Dr. Frank Clay­ton, stated “it’s unbe­liev­able what passes for research and gets the media all excited. The just-released report by the Cana­dian Cen­tre for Pol­icy Alter­na­tives is the prod­uct of shoddy research and is unsup­ported by the facts.”

Clay­ton goes on to say that “the report fails to con­nect post-2000 hous­ing price trends to impor­tant vari­ables like declin­ing mort­gage inter­est rates, ris­ing incomes and local fac­tors like a con­strained sup­ply of lowrise ser­viced land and now the HST in Ontario. Besides, the report shows that the increase in aver­age real home prices (prices with gen­eral infla­tion removed) in the GTA has been “rel­a­tively modest.”

I don’t want to come across like the guy in the check­ered jacket preach­ing that there has never been a bet­ter time to buy a new home, but I also hate to see buy­ers hold­ing off because some think tank said a wait­ing game might pay off, because it rarely does.

You can’t go wrong if you’re buy­ing for the right rea­sons — shel­ter, secu­rity and long-term growth.

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