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The Boom is over: Scotiabank
The slow 'bust' begins
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 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".
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 drops in terms of activity and prices, Warren said.
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 Canadian 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 international markets.
See the full Scotiabank report »
November 21, 2008 | Permalink
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Comments
Ess -- I doubt you'll find this, but I did mark your post - a year later property values are not 30 - 50% lower. More like 15 - 20% higher. (Not saying that's sustainable but that's what the facts are).
Posted by: Geoff | Nov 13, 2009 11:42:34 AM
Aren't most major banks financed through the U.S.?
Posted by: Mr Mogul | Nov 27, 2008 3:06:32 PM
Toronto Condos - With all due respect, I think you are delusional. Probably because you're also a realtor and have a vested interest in pumping up the market. Both the median price as well as the price per sqft in canada is much higher than that of the US while many of our major markets are overbuilt and long overdue for an implosion in prices.
It's amazing to see people in denial when the cycle always follows the same pattern. First transactions fall, then prices some time later. By this time next year, property values will likely be 30%-50% lower in many parts of the country. Mark this post.
Posted by: Ess | Nov 25, 2008 8:15:15 PM
Assuming they didn't overbuild, and given that new building has slowed down, and assuming we don't go into a major economic upheaval, and planned levels of immigration continue, I'd expect a quick recovery.
Posted by: davidm | Nov 24, 2008 11:28:11 AM
Its nice that because some global problems, Canandian real estate value is not reached the high peak. surely this will enable the buyers to buy it in future after the problems got over....
Posted by: Toronto Condos | Nov 23, 2008 12:59:24 AM
