Is The Housing Market As Bad As The Headlines Make It Appear? (CIBC Report)


A new report by CIBC emphasizes it’s important to focus more on the underlying economic details rather than the headlines when gauging the health of the Canadian real estate market.  Yet while it’s much less alarming, “the picture is still not pretty.”

CIBC says they do “not see house prices crashing” but believe “that house prices in Canada will level off in the coming year or two.”

The report continues:

Further out, the most likely scenario is that the eventual increase in interest rates will lead to a modest decline in prices (probably in the magnitude of 10%-15%)

Indeed a flattening in house prices in the next year or so is a necessary condition for such a soft-landing scenario. If the pace of house price increases accelerates during that period, then a year or two from now the likelihood of a violent price correction will be higher than it is now.

The report takes a look at:

  • Household debt & credit availability
  • Why averages skew results
  • Increase in high ratio mortgages

Read the entire report here

One response to “Is The Housing Market As Bad As The Headlines Make It Appear? (CIBC Report)

  1. A different POV about household debt from TD Bank:

    Household debt levels have become “excessive,” said Derek Burleton, deputy chief economist at Toronto-Dominion Bank. “There’s a growing vulnerability to an unanticipated event.” Virtually all measures of household debt are “flashing warning signs,” he added. Credit market debt, at a record 150.8 per cent, is approaching comparable levels to the U.S. just before the housing market crash.

    Record high household debt in Canada triggers alarm
    Globe & Mail, December 13, 2011

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