During this 60-minute webinar, Craig covers all the forces that lead to risk in the real estate market, including:
- Housing affordability: As home prices in Canada have climbed faster than income, affordability has deteriorated.
- Underlying factors driving price growth in Vancouver and Toronto: solid economic growth; population growth fuelled by immigrants; and land scarcity and zoning policy.
- Regulatory policy: The Canadian market is well-regulated, and is dominated by prime mortgage loans. Even with the growth of sub-prime mortgages in recent years, they remain a small share of the market.
- Measures to assess housing risk: Debt-to-income is a poor metric because it says little about risk. Debt service obligations tell a more appropriate picture of risk. The trend of a rising share of highly indebted households has reversed, and should diminish further as Bank of Canada rate hikes are felt.
- The potential impact of a price correction: Consumer spending is roughly 60 per cent of GDP. If more income goes to servicing debt or if there is a home price correction that creates a negative wealth effect, it could weaken the performance of the Canadian economy.
Craig Alexander brings 20 years of experience in the private sector as an economic and financial forecaster to the position of Senior Vice-President and Chief Economist. Craig oversees the Board’s macroeconomic outlook products and its custom economic and tourism research. He joined The Conference Board of Canada in September 2016.
Most recently, Craig was the Vice-President of Economic Analysis at the CD Howe Institute. Previously, he was Senior Vice-President and Chief Economist for TD Bank Group—the second largest bank in Canada and the eighth largest in the United States. During his tenure, he led a large team of economists providing in-depth analysis to TD’s divisions and clients. Prior to joining the private sector, he spent four years as an economist at Statistics Canada.