The headline “house prices expected to drop in 2017” wasn’t exactly what real estate investors wanted to see during the start of this year’s initial quarter. Homeowners who are planning to sell properties in Ontario would also normally think twice about getting involved in the real estate market under such conditions.

2016 has been a good year for the Canadian real estate market. Home prices have steadily grown since 2006 and new milestones have been reached by the industry. Average home prices have already reached the 1 million dollar mark in some selected cities (Vancouver, BC) and this is of course good for those who are selling their homes.

However, start-of-the-year predictions from entities in the Canadian housing industry somewhat instilled a bit of fear to both investors and homeowners. With house price expected to drop in 2017, would you still buy homes for the purpose of selling it back? Businesswise, this won’t be the case.

So, how did these predictions came to be? Apparently, groups of real estate experts have gotten their hands on some statistical data for the periods linking the end of 2016 and the start of 2017. Some of the highlights of these data include the following:

Slight decrease in house sales: For the period of December 2016 to February 2017, it was noticeable that there is a drop of at least 1.3%. This applies to all types of housing put up on the Canadian housing market.

Slight decrease in number of houses being listed on the market: For the same period mentioned above, there was a decrease of around 7% on new housing market listings. This could mean that either less constructions of new houses happened or homeowners are just holding on their properties to wait for better prices.

Significant changes in Canadian mortgage policies: This government-initiated change in policy just made it harder for individuals to avail of high-value/high risk mortgages. As an example, the allowable GDS and TDL percentages were adjusted so that fewer borrowers get the amount of mortgage they are applying for. With less demand for houses on sale, prices will naturally tend to go down.

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Now, should there be a real cause of worry among investors and homeowners? The following points of view should be put into serious consideration when this the topic shifts to this part:

 

  • Predictions are still just predictions: Information provided by a prediction is just a rough estimate of what might happen. There are no assurances that the burst in the Canadian housing market bubble will happen this year and within a very short span of time. The same predictions were given for the years 2012, 2015, and 2016. However, the housing prices in the Canadian market still climbed.

 

  • There are positive indicators and data worth looking into: Actual and not seasonal (or yearly) data was used for the predictions. If yearly stats will be examined, there are good things to see. As an example, the MLS Home Price Index or HPI is actually 15% up over the previous one.

 

  • The Canadian housing market is stable enough to withstand small price drops: In fact, there is a report which states that even a 40% maximum price drop can be endured by both homeowners and investors.

 

The lines “house price expected to drop in 2017” shouldn’t bother too much the entities in the Canadian housing market these days. However, it still matters to take a look at what the predictions are and contemplate on what can be done ahead for it.

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