David Rosenberg: All’s fine on the Canadian homefront
David Rosenberg, the latest pundit to weigh in on the hard versus soft landing debate, says Canada’s housing market has almost recouped all the losses brought on by Ottawa tightening the mortgage rules in 2012.
Just over a year ago, the federal government introduced a string of new mortgage rules to regulate Canadians' debt levels. Most notably, they cut the maximum amortization period for a government-insured mortgage to 25 years (from 30) and set the maximum for home equity loans at 80% of the property value (from 85%). Many expected these changes to put the brakes on the Canadian housing market, lock out first-time buyers and cut into Canada's GDP.
According to David Rosenberg, chief economist for Gluskin-Sheff, not only are home sales climbing, but any losses from last year seem to have been recouped. Home sales rose 6.4% in the second quarter, including increases in Vancouver and Toronto.
"Bottom line: The Canadian housing market is not collapsing, but rather stabilizing after achieving the government-induced soft landing," Rosenberg said.