This is an article from Scotiabank and CBC. It talks about the fact that the real estate boom of the past 12 years is over. We agents have know this for about the past 6 months or so, it just took a while for the press and the public to see the results of our slowing economy.
I wish you all the best!
Mark
Canada's housing boom over, but no collapse in sight: BNS
Last Updated: Thursday, November 20, 2008 11:03 AM ET - CBC News
Canada's longest housing boom in 60 years is over, according to a new report released by Scotiabank Economics on Thursday.
But, this country will not see plunging home values to the same degree as other, more at-risk nations, like the United States, said Adrienne Warren, Scotiabank senior economist and author of the study.
"This is not a 'U.S.-style' bust caused by overbuilding, speculative buying and imprudent lending," she wrote.
Instead, while Canada's longest housing upswing since the end of the Second World War is history, owners only face a garden-variety price adjustment, Warren said.
Essentially, the slowing global economy will crimp buyers' interest in home purchases across Canada, she said.
"We expect that the correction in national average prices from their late-2007 peak will probably be in the range of 10-15 per cent, well below the ongoing U.S. retrenchment," Warren said.
Falling prices - Housing starts - Region 2009 forecast Change from peak (%)
Canada 185K -19; B.C. 32K -18; Alberta 30K -39; Ontario 65K -24 Source: Scotiabank
In October 2007, the average price for a Canadian home was $312,024, according to the Canadian Real Estate Association.
If Scotiabank's prediction comes true, the average house price should reach a bottom somewhere close to $260,000, a drop of a further 7.5 per cent from the standard of $281,133 for a house in October 2008.
Her rationale for calling the end of Canada's housing boom is based upon housing starts, building permits and home prices, all of which are lower compared to their cyclical highs.
Urban areas in the especially red-hot region of Western Canada, like Calgary, Edmonton and Vancouver, are likely to see the biggest drop-offs in terms of activity and prices, Warren said.
Better off than the U.S. - Canadians, however, never used exotic financing nor piled up as much household debt as did their American cousins in purchasing new and existing homes.
Thus, while the Canuck housing market will drop in terms of prices and activity, Warren said, the U.S. sector faces a deeper plunge, Warren said.
Interestingly, Canadian home prices never reached the stratosphere achieved by other markets.
Housing indicators - Country Price change '97-'07 (%): Price-to-income ratio (%)
Canada 61:134; Ireland 167:135; U.S. 50:110; U.K. 146:149 Source: Scotiabank
Home prices in Ireland, for example, jumped 167 per cent between 1997 and 2007, compared to 61 per cent in Canada.
As well, housing prices in some countries now represent more than a household's annual income, a measure of affordability.
In Spain, for instance, the average home in 2007 was worth 156 per cent of the household's income. In Canada, that ratio stood at 134 per cent for the same year.
Based upon valuation measures used by the International Monetary Fund, Australia, the United Kingdom, Spain and Ireland are likely to experience a more depressed housing market in the coming year than will Canada, Warren said.
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