Could Canada’s hottest cities be about to crash?

by Olivia D'Orazio22 Apr 2015
The growth that markets like Toronto and Vancouver are experiencing is – by most accounts – unsustainable, but should sales reps in those cities prepare for a crash?
“It’s a fair question, and ‘No’ is the answer I’d give you,” says Phil Soper, president and CEO of Royal LePage and Brookfield Real Estate. “The likelihood of an increase in interest rates of anything other than a very minor nature, call it a quarter of a point or something, is very low right now.”
Soper says the only thing that could realistically cause problems for the markets in Canada’s largest cities is a steep interest rate hike. Last year, a rate hike seemed likely as the closely tied American economy continued its rapid expansion, adding some three million jobs in 2014.
“Even though we have independent monetary policy between Canada and the United States, there is a strong correlation between interest rates policy between the two countries, and if their interest rates started to rise, I am convinced ours would have too,” Soper says. “But, and here’s the good news in this, in the first quarter of 2015, the pace of expansion in the U.S. slowed down considerably.”
That slowdown, Soper says, took the threat of inflation off the table. The Bank of Canada went on to lower rates even further earlier this year – dropping the benchmark to three-quarters of a per cent. Earlier this month, the central bank decided to hold its overnight rate there, citing the “front-loaded” impact of lower oil values and an economy that “stalled” in the first quarter of 2015. It did say, however, the economy is recovering as it had expected.
“So with interest rates low, I don’t see a correction in Vancouver and Toronto,” Soper says. “I just don’t see it in the cards.”


  • by 4/22/2015 12:07:30 PM

    Why do you put titles on articles that breeds fear?

    Yes you ask the question, perhaps publish some information of what ACTUALLY happens instead of speculative jargon.

  • by 4/22/2015 4:25:56 PM

    Negative negative negative attitudes. That about all I read in this publication. Almost seems like the publisher intentionally wants to slam real estate any anything related to it.

    too bad for me that I even read it

  • by Davani 4/23/2015 12:23:50 AM

    The real factor that real estate is hot in Canada is the strong demand from buyers. The majority of these buyers in the last 10 years are from China and mostly new comers , new immigrants.
    As long as this trend exists , so would the heat of the RE market.
    Close immigration today , I bet you , it won't take three months that the whole economy in Canada will go down fast and furious.
    In fact, the local people's ability is decreasing steadily. Unlike what the Harper government is telling us , our economy is dependant to the huge monetary and financial stream pouring into Canadian economy.


Is a Toronto foreign sales tax a good idea?