The Canadian housing market may be correcting but not collapsing. In his Nov. 22 market report, Gluskin Sheff economist David Rosenberg draws attention to a Globe and Mail story, Drop in home prices spreads to Toronto,” specifically taking issue with the commentators calling for home prices to tumble by 25% or more.
It’s tough to see the housing market going into a tailspin, Rosenberg says, when the inventory backlog in the single-detached housing market is balanced and not excessive. Then he adds: “Recall that the meltdown in the early 1990s and the U.S. plunge five years ago followed years of credit-tightening moves by the central banks. Anyone think that Carney is going to raise interest rates 450 basis points with inflation barely above 1%?”
The typically bearish Rosenberg was one of the few lone wolves talking about housing excesses a year or two ago—but now that it’s become front-page news, his contrarian instincts have surfaced. “I find myself now in a minority resisting the temptation for hyperbole,” he concludes. My sentiments, as well.