Canadian housing market crash – there are a number of trends that could contribute to this – but is it really what we are seeing?
What drove the boom in house prices?
Research shows it takes between three and five years for changes in central bank interest rates to fully work their way through the economy. When they do, a one percentage point change in interest rates can have a three-to-five percentage point impact on home prices. But there are some other trends that are driving the prices up as well.
– since 2006 there’s been a nationwide trend of more condos than single-family homes being built, driving up the prices of the later
– in some cities, the zoning laws contribute to the rise of prices
The market cooled down in 2018
– Rule B-20, this new mortgage rule reduces the amount Canadians can afford to borrow by around 20%, disqualifying about one in five potential buyers and shutting many young buyers out of the market
Another worrisome trend is that household income growth has slowed down, even as interest payments have risen.
Want the full picture of what the future may hold – Read the full article to find out what the experts are saying about this possible Canadian housing market crash.
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