Real estate markets in Canada
I'm new to this site and this topic is of interest to me. I can't seem to hook into the thread I read earlier on this, anyway there is undeniably a big bubble in real estate values particularly here on the west coast and seemingly other more popular and highly populated areas. The telling sign that the market has peaked is that demand is falling off although construction continues at a furious pace. When you see the below average guy on the street talking of buying a condo on spec, run, do not walk out of that market if you can. As the demand begins to fall, prices may remain stable for a while until all the folks sitting on vacant houses and condos who bought on spec get the jitters and finally let the market value them. It is then that the prices will start to drop. Rather than chase the market down, some will be turned into revenue properties which in turn will reduce rental incomes and lower housing demand which in turn further depresses the housing market.
Is it going to be a crash? I think not as such as it will take several years for this to shake out. As for the severity, well after inflation I suspect it may very well hit the 30 - 50% mark. This is based on the fact that it currently costs around $1000 a month to own every $100,000 worth of housing. (there's more to owning a house than just paying interest) $500,000 condos rent for under $2,500, do the math. A slight increase in mortgage rates could decimate leveraged owners and speculators and cause a flood of cheap housing onto the market as we are currently seeing Stateside. I had a mortgage back in the 1980's that had an interest rate of 23%. I do own a couple of properties and just sold one I'd purchased for 20 G's for 200 G's. If I could I'd sell the rest.
Its inevitable and the sooner it happens the less damage will be done. It should have happened years ago as earlier threads on this topic thought it would.
My prediction is that demand will continue to decline. Prices will stabilize over the summer. By late fall prices will start to decline and within a year we will be well into a whole new ball game. I write this as it might be fun to look back on this late next fall and see what's happened and who said what.