BUSINESS REPORT: If you think that these Canadian cities are unaffordable now, just wait
Both Vancouver and Toronto’s housing markets are poised for major long-term price growth, according to a top economist with one of Canada’s big five banks.
Benjamin Tal, deputy chief economist of CIBC World Markets, drew that conclusion when looking at whether there’s a chance in the short term for prices to marginally flatten or soften.
“If you think those cities are unaffordable now, just wait,” Tal said.
“I think that from a long-term perspective, everything we are doing is temporary. The fundamentals are way too strong offsetting all of that.”
Buyers will be able to get around new, stricter mortgage rules by lengthening amortization periods to reduce monthly payments, Tal said.
Or, he said, they’ll find other alternatives such as opting for variable rate mortgages, or by using exceptions in the new regulations for people with significant assets.
In particular, Tal said, people will turn to private lenders and credit unions who are not affected by the new regulations and continue to pile into the Toronto and Vancouver markets — making both cities even more unaffordable.
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