Predictions of housing crash proved wrong for years, says BMO economist
The bubble will burst some time, but the challenge for forecasters is getting the timing right
BMO chief economist Doug Porter is calling out the bears who have predicted a housing market crash over the past eight years.
On the same day as the Canadian Real Estate Association noted the average price of Canadian home was now above $500,000, he pointed to forecasts as far back as 2008 that predicted a 25 per cent crash in home prices.
"Hey, forecasting is hard," he wrote in a note titled "Canada's non-Goldilocks Housing Market and the 33 Bears."
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Average housing prices are up 60 per cent since 2008, Porter points out, with the Toronto and Vancouver markets leading the pack.
For each year since then, Porter points to predictions, by competing financial institutions, that the housing bubble will burst.
Prices keep rising
Bearish predictions that Canada's housing market is about to crash, and calls for the government to cool hot markets, have been around for at least that long.
In fact, prices have risen steadily since the recession of the early 1990s and even the dip during the financial crisis of 2009 was a mild one.
"Da Bears may some day be right, especially on the hottest markets, but getting the timing down is half the challenge," Porter said.
A Goldilocks market is not too hot, not too cold.
But Canada's housing market is running both hot, cold and lukewarm all at the same time
In a report Tuesday, BMO points out the radical regional differences in the way Canadian housing markets behave.
"The Canadian housing market remains a tale of three solitudes — the uber-strength in Vancouver and Toronto (and surrounding cities in both regions), ice-cold conditions in markets exposed to oil prices, and the just-right middle markets in almost every other region," Porter wrote in that report.
He predicts a strong spring selling season as low rates remain and demand for houses in Vancouver and Toronto continues to outstrip supply.