The bears are restless.
Canada’s housing market is on a blazing trail — albeit propped up lately by sales in the Greater Toronto Area and Lower Mainland Vancouver — as its performance continues to fly in the face of dire predictions from grizzly observers.
Driving this point home, Douglas Porter, BMO’s chief economist, says the average sale price of a Canadian home
hit an all-time high of more than $500,000 this February (hardly a bear market, a term that denotes falling prices and selloffs). “That’s more than 60 per cent versus 2008, about the time the bears starting growling,” adds Porter of this price appreciation.
His statement comes from a note titled “Canada’s Non-Goldilocks Housing Market & the 33 Bears” — a goldilocks market is a mediocre one; it’s not too hot or cold — in which Porter pulls quotes from dubious housing market commentary over the past decade.
“Da Bears may some day be right, especially on the hottest markets, but getting the timing down is half the challenge,” Porter concludes. BuzzBuzzHome News has paired six of the forecasts Porter Highlighted with data from the Canadian Real Estate Association (CREA) and others to show how wrong the pundits got it.
2008: Canada’s housing bubble could soon burst
Sure, it could have — but it didn’t. However, 2008 was the last time resale home prices declined from the preceding year, with prices dropping slightly to $304,593, according to CREA. In 2007, the average home price had been $306,784. Still, as time passed, it becomes clear this scenario from the Ottawa Citizen via a Merill Lynch report never materialized, no matter how liberal your interpretation of “soon” may be.
2009: Why Canada’s housing bubble will burst
Although average new-home prices were down 2.3 per cent compared to 2008, resale prices were heating up around this time. The average price of an existing Canadian home was up five per cent by the end of 2009 over the previous year, according to Statistics Canada. In hindsight, that didn’t bode well for this opinion piece in the The Tyee.
2010: Canada’s housing market: An accident waiting to happen
“Several factors tend to contribute to the growth of a housing bubble: low mortgage rates, access to easy credit, net immigration and the stock of available housing,” highlights this Canadian Centre for Policy Alternatives report authored by David Macdonald. While observers have raised flags over all of these factors since 2010, Porter and company are still waiting.
2011: Canadian home prices will crash 25%
Nope. In fact, from 2011 to the end of 2015, the average sale price for a Canadian home has done pretty much the opposite: it increased about 22 per cent to $443,004, according to historical numbers provided by CREA. “Hey, forecasting is hard,” says Porter. “But let’s not give a pass to some of these scare-mongers who have been dead wrong,” he adds, nodding to this line, likely a reference to Capital Economics economist David Madani’s prediction from that year.
That forecast was looking ahead several years, but as recently as February 2015, Madani was still toeing the line, according to the Financial Post. “Prices will have to drop 45 per cent for Capital Economics to be right once you factor in the 20 per cent in price gains that have materialized since the 2011 call,” Phil Soper, Royal LePage’s president, explained to the paper then.
2012: Canada’s housing crash begins
Price growth this year was relatively flat, and sales activity declined. But unless your definition of a crash is a modest price increase of 0.3 per cent to $363,569 and sales slumping slightly by 1.1 per cent to 452,472 units — both numbers registered by the close of 2012 — this headline from a Canadian Business article misses the mark, too.
2013: Inside the great real estate crash of 2013
“My favourite,” writes Porter of this header from a front-page story in January 2013’s issue of Maclean’s containing this bit: “A housing correction — or, possibly, a crash — is no longer coming. It’s here. And you don’t have to own a tiny $500,000 condo in downtown Toronto or a $1.3-million bungalow in Vancouver to get hurt.”
Yet by December that year, condo sales in Toronto leapt 20.7 per cent year-over-year, with prices over this period rising 7.6 per cent to $367,376. That Vancouver bungalow? Well, detached home sales surged 79.3 per cent year-over-year in December 2013, while the benchmark price rose 2.5 per cent compared to a year ago to $927,000.