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Are we still on track for that price correction?

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Guest | 18 Dec 2012, 12:16 PM Agree 0

The Teranet-National Bank Composite House Price Index also revealed an overall decline of 0.4 per cent from October to November. According to the report, "For the first time since February 2009, when the recession was in full swing, prices were down from the month before in 10 of the 11 metropolitan markets surveyed.
Investor-favourite Calgary was the only city not to report a drop, posting a 0.4 per cent gain from October, according to the index. Victoria, Halifax and Edmonton led the way with a 0.9 per cent decline each, followed by 0.7 per cent in Winnipeg and 0.6 per cent in Vancouver.
The metro markets of Montreal, Toronto and Hamilton fared slightly better with a smaller decline of 0.3 per cent, with Quebec City down just 0.1 per cent.
The findings are not altogether surprising given the climate of deceleration since the new lending rules were unveiled in July. Canada macro strategist at TD Securities Mazen Issa expects the trend to continue before the market slowly show signs of recovery.
"The correction in Vancouver is already well advanced and we believe Toronto, which has been the market holding up the national index, will soon follow,” said Issa. “Overall we expect to see prices to correct by 10 -15 per cent over the next two to three years.
As we have noted before, after an initial adjustment period, the housing market tends to reaccelerate. This risk is nontrivial given the very accommodative interest backdrop, one which is expected to persist through most of next year.”
Still, Bank of Canada Governor Mark Carney warned home buyers against such acceleration earlier in the month, noting that while household debt conditions have improved, steadying the housing market will be a lengthy process.
  • Dan Brown, RHI | 21 Dec 2012, 04:11 AM Agree 0
    Actually Vancouver and area homes WILL DROP 30%-40% OVER THE NEXT 3 YEARS.
    I am sorry but it is true.
  • OliverInvestments | 08 Jan 2013, 05:41 AM Agree 0
    Toronto and Vancouver are a little strange and difficult to project since they dont really follow the economic fundamentals that well when it comes to Real Estate prices.

    Typically, real estate prices are almost always driven by economic fundamentals. More jobs = More people moving into town = More people looking for rentals = More people looking to buy houses = INCREASE in Real Estate prices. This is very evident in areas like Edmonton, Calgary (AB in general), Saskatchewan, etc.

    To explain Toronto and Vancouver, you have to understand that the world sees Canada as a SAFE ECONOMIC HAVEN. No it isn't perfect, but we are WAAAAAY ahead of almost 95% of the world. If you look at the economically / politically stable countries with a large growth in GDP, we are pretty much in the front seat.

    Because of these, rich people from all over the world want to park their money in Canada - and what are the most popular cities in Canada? Toronto and Vancouver (thank you, NBA - yes, Vancouver used to be in the NBA :D). Very rich businessmen from Asia (China in particular) literally go to Vancouver / Toronto and buy 5-10 condominiums at a time - they are not thinking about return of their investments in the next 5 years so they really dont care about what it's gonna do in the short term, they are doing this for their legacy (i.e. these are for the grandkiddies!).

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