Canadian Housing Prices Climb in July

The Teranet-National Bank composite resale house price index released last week showed that overall prices in Canada increased 0.7 % for the month of July. Toronto came in at 1.6% to bring the national average up.

More fascinating is the way analysts and the media can put vastly different spins on the same story. The National Post headline was "Canadian resale home prices increase in July - Toronto's hot market elevates national average". (http://natpo.st/SRnGo9). The Toronto Star, taking its usual doom and gloom approach to the housing industry, boldly announced:  "Market seems to be slowing". (http://bit.ly/Pu5pYX)

Both articles quoted different analysts who noted that the rate of increases was slowing, and that with tighter CMHC rules now in place, “they do not expect this trend (a string of robust month-to-month increases) to continue" as per Mazen Issa of TD Securities. Marc Pinsonneault, senior economist of National Bank, predicted that annual price growth will level off to 4% from the current 9.2%.  He even predicted: "I certainly expect prices to slow down and maybe even correct."

Amazing how headlines can slant towards the writer's bias and distort the facts. And the fact is that the Toronto resale market continues strong and healthy. A 9.2% annual increase in prices isn't good for the market anyways. CMHC also commented in its 2nd quarter housing report that it wasn't concerned about a housing bubble as it felt the current strong market was supported by demographic and economic fundamentals.

So why does Mr. Flaherty feel the need to interfere with market forces?  The market is clearly taking care of itself.  Lets hope The Toronto Star with its doom and gloom housing stories and Flaherty's manipulation of housing vehicles such as CMHC insurance rules, don't hurt our housing market, resale, or more importantly, the new housing market, which is a key economic driver.