3 versions of the home buying future

Comment: CMHC has been dead on for the last 6 years. They call for a soft landing. I believe it.

CCPA says bubble to burst, CD Howe dismisses, CMHC predicts soft landing

Three significant housing reports published yesterday paint very different pictures of the future of Canada’s housing market.

CD Howe Institute says that in spite of recent dips in Canadian house prices, we will not experience a US-style housing crash because of our stricter government policies and tighter underwriting standards.

However, the report published by the Canadian Centre for Policy Alternatives, has a different view on what will ultimately cause the bubble to burst.  David Macdonald, the economist behind the report entitled “Canada’s Housing Bubble: An Accident Waiting To Happen”, says that affordability and low interest rates are the issue.

With average house prices at 4.7 to 11.3 times Canadians’ annual income — much higher than historical comfort levels of between three and four times income, home owners may not be able to cope once interest rates goes back to their historic norms.

And finally, CMHC published the Canada edition of their housing market outlook in which the association forecasts a softer fall market with prices raising slightly in 2011.

CMHC also predicts that mortgage rates will gradually increase in the second half of 2010 and 2011.