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BOC Governor Says Canada Will Lean On Real Estate Because “We Need The Growth” – Better Dwelling

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Canada’s central bank isn’t really that worried about real estate, it appears. Bank of Canada (BoC) governor Tiff Macklem held a Q&A after a speech for the Edmonton and Calgary Chambers of Commerce yesterday. During the Q&A, the governor dismissed concerns about an overheated housing market. In fact, he welcomed its contribution to the economy as something needed.

Canada’s Economy To Further Lean On Housing

When asked if Canada needs new measures to cool the market, the governor wasn’t worried. Macklem responded, “I think right now the economy is weak… I think we need the support.” Further adding, “We need the growth we can get.” Yeah, it’s an odd take, let’s unpack what he may be referencing, if anything at all.

Canadian Residential Investment

Canadian residential investment as a percent of gross domestic product (GDP). Source: Stat Can, Better Dwelling.

One big red flag is Canada’s residential investment as a percent of GDP. Residential investment reached 9.43% of GDP in Q3 2020, up from 7.71% last year. For context, US residential investment peaked at 6.7% in 2006, during their housing bubble. The current rate in the US is just 4.3%, which is still considered high. Reading between the lines, that may have been subtle acknowledgment that Canada doesn’t have much else to lean on at this point. Further, a rise in household debt means a long-term slowdown in growth, which is a gamble they’re taking.

Bank of Canada Is “Surprised” By The Housing Rebound

The governor also stated they were surprised by housing activity during the pandemic. Macklem said, the BoC was “… surprised by the extent and strength of the housing rebound.” Further adding, they only see “some signs of excess exuberance.” It would appear a typical home rising more than the median household income is fairly normal to the BoC.

Canadian Real Estate Prices

The benchmark price of a typical home across Canada, in Canadian dollars. Source: CREA, Better Dwelling.

Canadians Shift To Living Outside of Cities

The BoC governor also thinks these are “fundamental” market shifts. Macklem continued, “with respect to single family homes, underlying this demand, is a genuine, fundamental shift in preferences.” Adding, people “want more space. They don’t [want to] commute.” This repeats the perspective the central bank shared a few weeks ago in their FSR report. At the time they said, the rise in sales is just a temporary bump, that will subside later in the year.

When does this become a concern? The governor said he’s watching for buyer expectations. He asked rhetorically, “Are people expecting the kind of unsustainable house prices we’ve seen?” Answering himself, “if people start to think those [price gains] go on indefinitely, that becomes a concern.” Must have been his first day looking at Canada’s real estate market.

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Bank of Canada Governor Tiff Macklem on whether Canadian real estate needs cooling measures. Feb 23, 2021.

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BCREA Education Programs Win 2021 ARELLO Awards – British Columbia Real Estate Association – BCREA

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This Clinton real estate deal cost the agent $75000 and his licence for five years – iNFOnews

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This Clinton real estate deal cost the agent $75000 and his licence for five years  iNFOnews



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I was love-bombed by a Sydney real estate agent. It was intense – The Guardian

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I was love-bombed by a Sydney real estate agent. It was intense  The Guardian



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