Provincial financial watch dog plans ahead of a real estate decline

It is quite clear the market spectators have been filling both buyers and sellers with ideas that home prices will only continue to rises but for the province, being on the fence in the situation is a rather wise decision because as with any hot real estate market, it will definitely cool down at some point in time and the province does not want it to come as a surprise.

This has prompted the provincial financial watchdog; the Financial Accountability Office of Ontario has been coming up with measures to prepare the province for any future change as reports from their recent release shows there is expectation of a housing decline.

In their latest report, the FAO summarize the effects a cool real estate market will have on the economy. Although it is not their duty to predict home price changes, they however look through issues that might affect the economy and home prices are just one of such issues.

According to Luan Ngo, Senior Economist with the FAO, the housing price change is highly determined by macro and consumer factors.

He expects the market to unfold on a base scenario saying a slight change in interest rates, consumers increasing profits or buyers holding on properties will most likely lead to a market cool down.  And if this occurs it will have great effects on the provincial economy.

However, the estimated impact of a reduced average home price remains uncertain but according to Luan Ngo, it is best that the city have an open mind when it comes to a real estate decline.


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