Will Canada’s housing bubble burst?
Home ownership is at the centre of many Canadians’ financial retirement plans. That’s especially true for baby boomers who are sitting snugly atop a nice wave of real estate inflation.
In fact, the average price of a detached home in Canada has doubled since 2000, and in September was sitting at $331,000. Of course that number pales when compared to Vancouver, where the average price for the same period was $679,000 and in Toronto it was a still-high but a more modest $427,000.
So a lot of people nearing retirement age are hoping the housing market will stay buoyant until they cash out, allowing them to downsize, pay off their debts and still have plenty of money left over.
A lot of American homeowners used to think that way. But from their peak in 2005, U.S. house prices have fallen almost 30 per cent, and they are still trending lower. Things are still so bad in the U.S. that the real estate default rate hit a record high in 2010, with more than three million households receiving foreclosure notices. And it could get even worse in 2011. Read More…
This is what you hear in Vancouver all the time. If you mention that the market in Vancouver may drop people get really aggressive telling you why it wont. This video makes me smile, typical of so many Vancouverites.
My property value will never go down
http://www.youtube.com/watch?v=1-4nJsmdZQw
I would agree with brents comment. Our housing costs have to drop as baby boomers retire to nursing homes or apartments, there will be an abbundance of houses that will not be able to sell for there so called market value. It has only one direction it can go and that is down …… way down.
Just a thought on renting, If you share rent, to me your are not wasting any money these days. My Rent is 550 shared so 1100 total and a lot of people pay that in taxes roughly, in a large city. So Why is it such a big deal to own your own home. I don’t have to continually upgrade my home to keep the value and fix and pay for yard keep and snow removal, I can contribute so much more to my retirement and live comfortably. I can take winter vacations and drive a nice car and don’t have to put any of it on credit. I Don’t understand why it is such a big deal that Canadians must put themselves in financial risk in order to own a home. We have seen the cycle again and a again, what goes up must come down. It is unfeasible that houses will continue to rise forever without wages. And they definitely have not. = one outcome.
Sasha, my opinion…the Canadian housing market hasn’t even STARTED to burst. Mark my words, we WILL see exactly the same thing that the US has, perhaps even worse given our current debt to income ratio. Those that didn’t buy and already owned topped up their mortgate because the banks let them. This is going to be VERY ugly and the worst thing is, guess who suffers? The Canadian tax payer, as CMHC mortgages are insured by none other then our Federal government. Canada is going to be screwed. My opinion, lets see how this plays out….but now might be a good time to buy a house stateside so you can be ready to move when their economy starts to really recover as ours slides further into the abyss.
Because we have stronger regulation the bubble will burst but not because of the nonsense the US went through but because it is the natural order of things.
@bill_p, renting is only good if it is only a stop point to something more — buying a home. Otherwise is wasting money down the drain.
I still rent. Is that good?
All things come to an end. I say sell..sell..sell!
Without the real fix in the mix such as ridding the US blatant evil activity of credit default swaps, etc it is only a matter of time before we too experience the same pains.
Wow nearly $700,000 in Vancouver? That’s not even in Ontario…shame on them!
As the America’s go so does the rest of the world
The US’s situation was unique and although this article goes into depth to point out the stark differences to our nations we are well buffered and will not have a serious collapse any time soon.
Maybe i’m mistaken but aren’t we STILL experiencing the burst?