Housing market “the only thing moving”

October 07, 2019

With Canadian housing sales rising in September for the seventh straight month, median home prices rising moderately and interest rates falling, the residential sector is seen to be coming off a shallow bottom.
"This should put to rest concerns of a protracted housing correction. The market is now clearly past its cyclical bottom and recovering smartly, although the turnaround is more tentative in western markets," noted RBC chief economist Robert Hogue. 
The national home price index is now at $627,400 for a typical home in Canada, just $800 below the record high set in May 2018, according to the Canadian Real Estate Association.
But economists note the Canadian economy is still facing headwinds. The most recent Statistics Canada data showed retail spending in July was flat for the month and the year. Year-to-date retail sales volumes increased just 0.8 per cent—the slowest pace of growth since 2009. Meanwhile, household savings rates are at near record lows.
Weakness is also being seen in the mining and oil and gas extraction industries. Together, these sectors suffered the largest contraction since May 2016—declining 3.5 per cent in July from a year earlier. B.C.’s key forestry sector is slumping and the Ontario auto industry is stalling, economists note.
Benjamin Tal, CIBC chief economist, recently summed up the importance of a healthy housing sector in an interview with Bloomberg.  “The housing market has nine lives. Every time it’s supposed to slow down, something bad happens elsewhere that keeps interest rates low and the party’s still going,” Tal said. "The consumer is not there, clearly investment is not there, exports are missing in action and the only thing that’s moving is actually the housing market again.”