U.S. home ownership rates have reached 18-year lows but don’t expect Canadian levels to follow anytime soon.
Existing home sales appear to be rebounding in Canada’s two most expensive markets with a new trend showing a widening gap between low rise home prices and condominiums in Toronto.
Even if Canadian home sales continues to slide — and there are plenty of signs the market might actually be turning around — it could take some time before home ownership rates are actually impacted.
The risk to the Canadian economy is the buyers entering the market today are on the fringe, much the way they were in the United States before the market crashed there.
“High ownership rates are endogenous to an economic cycle, prices are raising and that makes housing look like an attractive investment,” said David Madani, Canadian economist with Capital Economics.
With that high penetration rate comes the likelihood of people entering the market with smaller downpayments and generally weaker credit ratings. “You might get proportionally more first-time buyers,” said Mr. Madani.
Canadian home ownership levels are not tracked as closely as they are in the United States but it is believed we are now close to having 70% of households in an ownership position — an all-time high. We were at 68.4% based on the 2006 census and the percentage is expected to climb the next time data is released.
Source: Financial Post