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BMO on housing market: ‘Bubble fatigue? Try buyer fatigue’

BMO on housing market: ‘Bubble fatigue? Try buyer fatigue’

These are stories Report on Business is following Wednesday, March 6, 2013.

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Housing won't rebound quickly: BMO
Projections for Canada’s housing market are all over the map. But where Bank of Montreal’s concerned, residential real estate probably isn’t going to bounce back any time soon.

The market has been cooling markedly since Canada introduced new mortgage restrictions in July, and some observers believe it will soon find a new floor before picking up again. Even those who don’t see a pickup on the horizon, however, aren’t forecasting a U.S.-style meltdown.

As The Globe and Mail’s Kevin Carmichael reports, the Bank of Canada suggested today that the battle against a housing bubble has now been won, and consumers are tackling their record debts.

Some observers have suggested that the type of restrictions brought in by Finance Minister Jim Flaherty have only a months-long impact, and a rebound follows.

And as Tara Perkins writes, others expect a pickup heading into the spring selling season. Indeed, CIBC World Markets economist Benjamin Tal referred this week to “bubble fatigue,” by which he meant that potential buyers have been hearing “bubble” for so long that they may be starting to ignore it.

But chief economist Douglas Porter of BMO Nesbitt Burns, citing February sales numbers from some cities, indicate that national sales were down by about 12 per cent from a year earlier.

They were down 15 per cent in Toronto and 29 per cent in Vancouver, though last year was a leap year so there was an extra day.

“While we are certainly not in the crash camp, we are realists, and the reality is that home sales have taken a big step back and are unlikely to rebound any time soon,” Mr. Porter said in a research note titled “Home sales: Bubble fatigue? Try buyer fatigue.”