Before you can speculate about the size of a Canadian real estate bubble, you have to acknowledge there is one at all.
While some experts say there is, and while even the government has taken measures that signal there is, the Canadian economy continues to thrive. Many economists say there isn’t a housing bubble — the market is just slowing down. And so long as Canadian homeowners are working, earning, and able to pay their debts, will a rumoured Canadian real estate bubble burst?
It can’t be denied that in fall of 2017 the Canadian real estate market began to cool, which seemed to be a direct result of two consecutive rate increases by the Bank of Canada — the first time in seven years. But does a cooling market necessarily equal a housing bubble?
Most of the bubble speculation has been based in major arteries — countless articles have been published about a potential Toronto housing market bubble or a Vancouver real estate bubble. But it’s hard to digest that the Canadian real estate market as a whole is in a bubble.
Let’s look at the areas surrounding the GTA, for example. Property values are sky high, as are people’s mortgages. When interest rates increase, people look to make housing more affordable, often by downsizing or relocating to more affordable communities. The GTA may have been the first to feel the impact of a more frugal buyer. Many people began selling to move, creating more supply than demand.
Areas outside the GTA, such as Barrie and Hamilton, have also boomed. They’re Go Train accessible to the GTA, but still very affordable to own a home (detached houses are still available for $500,000 compared to Toronto where they’re $1 million plus). While the Toronto real estate market may self-correct somewhat, those outer regions could continue to boom. Just like while detached homes may cool in the Toronto real estate market, condo purchases may boom as a less expensive alternative.
How can you use this to your advantage as a mortgage broker? Take these indicators and look at how you can use them to acquire more deals! Perhaps you should be marketing for more condo and refinancing business in the GTA, while marketing financing for purchase mortgages in Hamilton and Barrie.
Staying on top of housing trends and forecasts can help you decide for yourself if there is a Canadian real estate bubble. Tools such as the Teranet Market Insights report: http://www.teranet.ca/commercial-solutions-blog/teranet-market-insights-report-sept-2017/ can help you keep tabs on key up-to-date information.
Purview can show you the best tools to help you thrive in a changing market. Contact us today at 1.855.787.8439 or visit www.purview.ca.