By John Morrissy, Financial Post December 10, 2010
There was no bubble and there will be no bust in Canada's housing market, a TD Economics report said Thursday.
The market has instead "landed safely," said economist Pascal Gauthier. He said 2010 "was not what bubbles are made of. Similarly, under our forecast interest-rate profile, the next two years will not be what crashes are made of."
Statistics Canada reported Thursday new home prices edged up in October for the third straight month, due to increases in Toronto and Vancouver. The federal agency's New Housing Price Index rose 0.1 per cent during, following a 0.2 per cent increase in September.
The market's stellar recovery through 2009 had many worried it had become overheated as first-time buyers rushed to capitalize on rock-bottom mortgage rates, and sales and prices soared.
But the race to get in before borrowing costs rose front-loaded the market, and sales eased into 2010. Listings also retreated, keeping the market in check and preventing a steep price drop, Gauthier said.
By the second half of this year, sales have begun to rebound, as mortgage rates eased. The bank now expects those low rates and higher sales to carry into 2011, and it has revised up its annual sales forecast by eight per cent to 420,000 units.
The 2011 outlook is pretty much in line with a forecast earlier this week from realtor Re/Max, which said it expects sales next year of 441,000 units, and for average prices to rise three per cent to $350,000 by year-end. TD expects average prices to drop slightly in 2011 to $336,000 from $338,400 in 2010.
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