Forecasters predict housing slowdown in 2015 but still fear crash

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A poll of forecasters by Reuters shows a consensus that next year will see a slowdown in housing construction and prices but are still fearful of a market crash. Most of the 23 forecasters polled believe that house prices are higher than they should be. Nine say there is a higher risk of a crash than a year ago, the same number say the risk is the same, while 5 say it is lower. The analysts expect a price rise of 5.2 per cent in 2014, slowing to 2 per cent in 2015 and 2016; roughly in line with inflation. Housing starts are predicted to reduce to 181,000 in Q4 2015 compared to 190,000 in the last three months of this year. The household debt-to-income ratio is a concern for around half of the forecasters.
  • DB on 2014-11-26 8:23:55 AM

    If all indications are correct, via the economic forecasts, there is potential for an economic recession via currency debasing by numerous countries. Europe and China are contracting so any kind of belt tightening or rate increases in North America shoots are dollars higher creating lower demand for goods and services. Thus lower growth. If we were running a full capacity and seeing inflation, rate increases would be justified IMO. I don't think so. Europe today is heading for more QE in the form of a 252 billion stimulus. China just reduced lending costs as their economy shrinks. See the point..........a market crash isn't going to happen because of rate increases, rather lack of work / job growth.

  • PM on 2014-11-26 9:08:48 AM

    ^ Agreed.

  • JG on 2014-11-26 9:47:29 AM

    Yet yesterday, CMHC predicted the property market is not at risk.

    My opinion is that none of them know for sure and the media doesn't help the cause by causing the general public to worry about what might or might not be.

  • Angela Wong-Liao - Invis on 2014-11-26 10:45:32 AM

    There are so many predictions since 2009, soft landing, market crash, etc, lets wait and see and I agree with JG, our media has to be careful about their reporting as we do not want the public panic which can be a potential self-fulfilled prophecy

  • Mortgage Guy Geoff on 2014-11-26 12:25:50 PM

    Good point Angela. Perhaps I could add that during this period of {usually conflicting} predictions the housing market in general has been much more stable than many other markets, just like it has been for the last, I don't know, 50-60 years. Since history tends to repeat itself, doesn't it make sense that Real Estate will continue on this path of stability and reliability? Sure there may be some slight bumps in the road or certain segments that are more volatile, but overall history doesn't lie.

    It continues to be the case that prudent operators need to cut through the "noise" and focus on the facts so that our customers can make more rational decisions about their home purchases and financing.

    I apologize for wrecking a good headline with logic.

  • Layth Matthews on 2014-11-26 12:26:34 PM

    I know. The world has gone crazy. Is a slow down in housing starts good for home prices - reduced inventory...or is it bad for home prices - reduced employment! I tend to agree, it's the latter and the OECD forecasts are almost always wrong. I don't see sustained rate pressure at all. But I wouldn't mind being wrong.

    Somehow we (the world) avoided the race to the bottom of currency devaluation up until now that Europe and China are joining the party. Could get messy.

    So what's a mortgage broker to do? Just work and spend as if these "favorable" market conditions may not last!

    Personally, I like trailers. (But read the fine print and negotiate hard on the loyalty clauses because some of them are way too conditional, which defeats the purpose.)

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