The Canadian Economy Is Surging So Why Are Home Prices Down?
In the second quarter of this year, the Canadian economy outpaced every other G7 country in household spending. The numbers from this quarter indicate that this is the greatest increase in spending since before the last recession. 2017 has been a wild year for the Canadian economy with everything going up right now except that we see home prices down.
With that said, it seems that the Bank of Canada will follow through with another interest rate increase. This rate hike could hit as soon as the first week of September, and all major banks and investors are acting accordingly.The Canadian dollar is up, the GDP has increased- this is in part due to a general international recovery in the markets, and because of increased trade volume.
Real Estate And The Canadian Economy
A large and often overlooked part of this economic surge in Canada is in part due to the real estate market. With home prices down or at least seeming to be on the decline according to general averages, this might be indicative of a different issue.
With an increase in overall home values in Canada over the years, we have seen a substantial increase in household spending. Though, housing sales volumes have dropped in the past few months in Toronto and Ontario in general, the value of homes has not actually seen a decline.
If we take a look at where this household spending is coming from, we can find that home repair and renovations are posting strong gains than construction. People are seeing the value in their homes and the potential for growth. Thus, people are actively seeking to maintain and increase their property value.
A large part of this can be in part due to the increase in jobs and pay for Canadians across the board. With a global economic recovery, virtually every sector has seen a level of growth that has long since surpassed projections from policy makers and private firms.
So How Are Home Prices Down?
Despite all this, home prices are still, apparently down. Is that really the case, though? It seems that market numbers are based on percentage of sales and average sale price. Maybe what we can glean from the numbers today is that certain types of buyers are buying certain kinds of property. With the strong Canadian economy, this might surprise you that home prices are down on average- so maybe controlling for the type of buyers and sellers we can pinpoint a different problem.
Listings are up, but many sellers seem to be trying to sell their properties at above what sellers are willing to pay. With properties that do sell, sellers are actually getting their asking price. We have a market where sellers are fishing for much higher prices.
When you factor in that many Canadians are spending money on renovations. It seems that owners are maintaining their biggest asset! When you have something that has gone up in value often between 30-50% in a few short years – you will work to make sure you maintain your value! In this sense with house prices going down, we have numerous updated homes to add to the inventory down the road that are worth much more.
In real terms, we have a market where we have listings with no clear intention to sell. While this might not apply in every single case, we can take a look at how many listings have been pulled from the market and not been sent back. In this case, we some current Canadian economic trends among people who have not seen home prices down in a very long time. 2017 numbers are beyond what many homeowners could have dreamed but the Canadian economy is strong enough that they have no reason to let go without fetching the highest price possible.
Analysts tend to believe that when serious sellers choose to re-enter the market we will see things go back to normal. It is good to remember that this seemingly high inventory and days on the market are actually what Toronto normally looks like. A summer slowdown doesn’t signal doom and gloom typically, so why should we panic in 2017?
A lot of people reporting on the state of the market are relying on data from the most volatile and high cost time in Toronto’s real estate history. So, when we look at the housing numbers from this quarter, we can be cautiously optimistic.
Putting It Together for 2017: The Canadian Economy, Home Prices Down
A growth in spending is usually indicative that people have money that they are willing to spend. It would not be unreasonable to bank on a stabilization. When we have a strong economy in Canada, despite mortgage regulations and increased interest, people are spending money. The bottomline is to focus on the bottomline.
That said, this is a buyer’s market and those letting go of their properties at this time are not in a strong position to negotiate often time. Because the market is saturated with numerous listings in every area, you can cautiously navigate resale properties.
New construction in Toronto is something that has sped up in this same quarter. That said, this is still a buyers market. This is an optimal moment to purchase new constructions and pre-construction properties. With the right guidance from experienced professionals, this is a great time to invest in the property market!
With home prices down, or at least seemingly on a slump, we can take advantage of the strong Canadian economy. Without a doubt, we can comfortably say that house prices aren’t going anywhere. The best part about an economy, is that it’s shaped by consumers and actual players.
With people taking household spending up, especially in terms of home renovation, you won’t see home prices down for long! The Canadian economy and international markets are speeding up in sync with one another and for that reason the best time to buy is now!
Looking beyond the Canadian economy forecast, we know that the market can well surpass what analysts predict. With Canada’s economy today, we can see that market factors and indicators have not been able to accurately project today’s GDP from 2016!
We know that some think Canada’s economy is headed for a repeat of the recession, but it is wise to note that something is always on the rise. This is a Canada economy fact! When people say home prices are down, we know that taking any extreme measures is not logical. Just as we cannot anticipate when markets go down, panic is a sure way to hurt Canada in general.