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This article was published 25/1/2012 (3092 days ago), so information in it may no longer be current.
The Winnipeg and Canadian resale-homes markets are overheated, but a U.S.-style crash isn't in the cards, a senior Canadian economist told a Winnipeg audience on Wednesday.
"There is little doubt in my mind that the housing market in this country and in this city are overshooting," Benjamin Tal, deputy chief economist for CIBC World Markets, told an audience of about 300 people attending the WinnipegRealtors' 2012 forecast breakfast. "But if you overshoot today, it doesn't mean you have to crash tomorrow.
"I don't see a cliff. I don't see a crash."
Rather, he sees the Canadian market levelling off, or "stagnating," over the next year in the face of slower Canadian economic growth and ongoing concerns about the European debt crisis and the drag that is having on the global economy.
And he said that's not a bad thing, because it will give Canadian homeowners a chance to take advantage of low interest rates and reduce their mortgage and household debt.
The WR's residential market analyst, Peter Squire, had a more upbeat forecast for Winnipeg's resale-homes market. He told the audience members, most of whom were real estate agents, he expects units sales and selling prices to continue climbing in 2012, although at a slower pace than in 2011.
Squire predicted unit sales will grow by as much as two per cent and the average selling price of a residential detached home will rise by between three and five per cent.
Last year, sales on the WR's Multiple Listing Service jumped by seven per cent to 13,065 units, while the average selling price rose by six per cent to $256,748.
Squire said many of the factors that helped drive the market in 2011 will still be at play in 2012. They include low interest rates, a healthy local economy, high employment levels and a growing population.
"So momentum is on our side for 2012, as well," he added.
Squire isn't the only one who thinks Winnipeg's housing market will continue to grow in 2012.
A Royal LePage forecast released earlier this month called for a 2.9 per cent increase in sales and a 4.2 per cent rise in the average selling price. And Canada Mortgage and Housing Corp.'s latest forecast was for a 1.7 per cent increase in MLS sales for Winnipeg.
Some economists have been warning in recent months Canada's housing market, and the Vancouver and Toronto markets in particular, are overheated and due for a major correction. They've also expressed alarm at the growing level of consumer debt in Canada.
But Tal downplayed the seriousness of the Canadian consumer debt situation. He said only about 4.5 per cent of Canadians with mortgages have a debt-service ratio of more than 40 per cent and less than 20 per cent equity in their home, versus 22 per cent in the United States. And the numbers are similar for Winnipeg.
Also, only one-third of Canadian borrowers are heavy borrowers, and they account for 72 per cent of all debt, he said. They're the ones who have to focus on reducing their debt load, he said, and continuing low interest rates for the next couple of years should help them do that.
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