Home sales, prices in Canada signal 'fabled soft landing ...

Canadian home prices remain incredibly calm, cool, and collected

While it?s too early for victory laps, evidence is building that the Canadian housing market has pulled off the ?fabled soft landing?, says Douglas Porter, chief economist for BMO Capital Markets.

But not everybody thinks so

Here?s why Steve Eisman, who rose to fame betting against subprime mortgages in the U.S., says he is pessimistic about the Canadian housing market. Read on

Sales of existing homes climbed 0.6% in April from March, which trimmed the year-over-year decline to 3.1%, the Canadian Real Estate Association said on Wednesday.

Porter points out that recent surprises in home sale data have consistently been on the high, rather than low, side.

Sales have risen in three of the four past months and are pretty much unchanged since last August when tighter mortgage rules first began to bite. Porter said other key metrics support the view of a ?well-tamed? market. Sales and listings are balanced and the backlog of unsold homes is at a slightly high, but ?unremarkable? 6.6 months.

Adrienne Warren of Scotiabank says even with tougher lending rules, low interest rates continue to encourage sales. After a sharp dip in the first few months after the new rules were introduced, sales have steadied in 2013.

However, it?s home prices where the stability of the market shows most, said Porter.

?Despite the very loud gnashing of teeth and excessive wringing of hands for well over a year on the topic, Canadian home prices remain incredibly calm, cool, and collected,? he said.

CREA?s home price index rose 2.2% in April from a year earlier, echoing similar increases in every major index for Canadian housing prices. Porter noted that 20 of the 26 cities are still reporting price increases over the past year, ?a far cry from a hard landing.?

?While some are highlighting the fact that prices are now rising at ?their slowest pace since the 2009 recession? the plain facts are that: a) they are still rising, and b) faster than inflation, and c) prices are at all-time highs. Some meltdown,? said Porter.

It was a view echoed by several other economists.

Sonya Gulati, senior economist at TD economics, also hailed the ?spring thaw? in Canada?s housing market. But while there are signs of promise, she does not expect a robust revival.

?There simply is no economic impetus for a full-fledged comeback in the cards. In turn, the 2013 spring home-buying season should be mediocre at best,? she wrote.

Source: http://business.financialpost.com/2013/05/15/canadas-housing-meltdown-must-of-missed-that/

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