Decline in home-buying population to drag down housing
With the Bank of Canada cutting interest rates again this week, talk has turned to what it means for the housing market — and whether lower interest rates will lead to a housing correction or real estate bubble. Undoubtedly the last interest rate cut, back in January, spurred strong price and sales growth. In a report issued Friday, TD Bank said mortgage rates effectively fell 0.55 percentage points since January, even though the BoC’s January cut was just 0.25 percentage points.That may explain why detached home prices in Toronto and Vancouver are growing at double-digit rates, and why housing starts hit a 10-month high in June, of nearly 203,000 new homes. But according to prominent real estate analyst Ben Rabidoux, those housing-starts numbers are a problem. That’s because the working-age population, which does most of the home-buying, has gone from growing much more quickly than usual a few years back, to growing much more slowly today. So Canada is building far too many houses, Rabidoux says.
I’m not sure I would be heading to Canada for my retirement, and less certain abotu the chances of a real estate bubble, but I also wouldn’t be heading there to invest in real estate (or Miami for that matter) unless I was prepared to take a great risk. In fact I see a real estate bubble coming soon to the Canadian real estate market, as well as in Miami.
In Canada they are building enough houses to supply TWO houses for every person they are adding to the working population. This is just not sustainable! I am seeing a repeat of what happened here in South West Florida real estate, and effectively pricing the retirees out of the market for a while.
Remember folks, if it seems to easy – check your assumptions.
Check out article above – its an eye opener.