It’s only confirmation of what most brokers already feared, with TD Economics suggesting the average Canadian home price will fall 10 – 15 per cent in the next two years, taking the number of sales – and so funded volume – with it.
“In our view, average home prices will likely contract 10-15 per cent over the next two years, with markets that are generally viewed as more overvalued, such as Toronto and Vancouver, experiencing the largest adjustments,” according to a release issued by the bank late Wednesday. “Fewer home sales will reduce consumer purchases of housing-related goods and services, such as renovation supplies and furniture and equipment.”
Brokers aren’t likely to escape those falling dominos, with both the average commission cheque and the number of deals taking a hit.
It means mortgage professional will have to do a better job of winning and retaining a dwindling number of clients, say industry veterans. It also means those seasoned professionals are better positioned to weather any coming storm given their “deeper” client lists.
“Also, in terms of refis, unless you have a stable of private lender in place, it will be harder to get those refi deals done,” Ray McMillan, a broker with Home Mortgage Consultants Inc., told MortgageBrokerNews.ca earlier this week. “Young agents who haven’t had the time to develop a client book of people with significant equity in their homes are disadvantaged because they’re more dependent on first-time buyers with 5 per cent down.”
But even established brokers are likely to take a hit, considering TD’s predictions for economy-wide fallout.
“In addition, the blend of softer sales and rising inventories of unsold new homes is likely to bring down the pace,” reads the analysis. “Residential construction (is) expected to detract from growth in 2013.”