Will Canada's Housing Slump Play Out Like America's?
According to a recent article by Larry MacDonald: -
Year-over-year increases in house prices continue to decelerate in Canada, from 10% in March to -0.6% in December. This is the first month since the 1990s where the change at the national level was negative. Leading the slide were Calgary house prices (-7.6%), followed by Vancouver (-1.5%), and Toronto (-0.6%). The other three cities in the index remain in positive territory: Montreal (5.4%), Halifax (4.6%), and Ottawa (4.2%).
An analysis by Worthwhile Canadian Initiative blog may be of interest to those concerned about a U.S.-style meltdown in Canada. The first chart below compares U.S. and Canadian house price trends (measured by the repeat-sale methodology). It shows a less extreme rise for Canada and so far, much less of a correction. The second chart shows the ratio of house prices to gross national income, which reveals Canadian house prices shot up a lot less than U.S. house prices relative to incomes. Thus, the correction in Canada is likely to be much milder.
CanuckPost®: Really?
As much as we would like think that is the case. We don't think so. History told us Canada economy is always a laggard as compared to their southern peer. What that means is our Housing Slump will be as bad, if not worse. The only difference is ours will take a longer period of time materialise. And we predict ours is likely to be as bad 1-2 years from now.
Well, we are actually working on the fact and figures on this topic, we are doing this simply because we are convinced that is the case as proven by many ups and downs in the past. So, why should this be any difference?
In short, we believe our slump will be as bad except what we really like to talk about is what can we do to capitalise on the slump? Stay tuned for our "Chasing The Crocodile".
Thursday, March 12, 2009
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