Some much-needed optimism about the housing market

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The second in command at the Bank of Canada has a rather optimistic view of the housing market – despite various reports to the contrary.

Carolyn Wilkins, senior deputy governor at the bank of Canada, believes the Canadian housing market will achieve a soft landing.

“Our base case, and one that we outlined in the [October Monetary Policy Report], is that the housing market and household debt are going to evolve in a constructive way,” Wilkins told The Globe and Mail. “We don’t see the risk as part of our base case at all.”

Wilkins argues the economy is recovering, and will continue to do so.

“We see strengthening growth in Canada that’s coming from the U.S., from past monetary policy easing, and also from the lower dollar,” she told the Globe, Friday. “What we are seeing is the rebound in the second half [of this year] that we were looking for. We’re seeing signs that the exports that you would expect to lead the recovery, that would also be sensitive to changes in the exchange rate, are picking up.”

Her views on the housing market will likely be welcomed by industry players, who have long argued demand will continue to drive various markets – especially in large centres such as Toronto and Vancouver.

Those two markets are expected to continue to see impressive gains. Especially Vancouver’s.
A report by Central1, an association for credit unions in British Columbia and Ontario, predicts that the median sale price of Greater Vancouver homes will rise for the next three years; 4.5% this year, 6.1% in 2016, and 3.8% in 2017.

“Metro Vancouver home prices have remained in the spotlight, keeping the housing affordability debate percolating in the news and social media,” economist Bryan Yu wrote in the report.
Still, the housing market has its share of naysayers.

Most recently, the Canadian Centre for Policy Alternatives and the OECD warned about the effects of a housing crash on Canadians.

According to a report from the left-leaning think tank the Canadian Centre for Policy Alternatives, one in 10 young homeowners would be left with an underwater mortgage in the event of a 20% housing correction.

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