It was December 2008, and the following predictions were made:
Benjamin Tal, CIBC:
“This is clearly a market that is extremely risk averse, and this is not the ninth inning of this game, this is just the beginning. I think that any hope of a quick turnaround … is misguided.” Mr. Tal said he expects average house prices to fall by another 10% over the next 12 months. (Source)
“The decline is going to be significant” (Source)
“Given that we’re in a recession, that means house prices will be correcting,” Tal said. “And they will be correcting more in the West because when you double the value of your real estate during the course of breakfast … affordability becomes an issue.” (Source)
Housing prices will fall about 5% across Canada by the end of 2009 as the slumping economy takes a bite out of consumer confidence. (Source)
Douglas Porter, BMO:
“The overhang of unsold homes is clearly a negative for prices looking into 2009. When you couple that with the likelihood the economy is going to be in recession over the next year, it’s awfully tough to be optimistic for the housing market in the year ahead.” (Source)
Expects housing prices will plunge another 30% next year — on top of the 11% drop so far this year (Source)
Adrienne Warren, Scotiabank:
National house prices predicted to drop by 5%-10% in 2009. (Source)
Global Property Guide:
The previously hot markets of Western Canada, including Calgary, Edmonton and Vancouver, will experience the largest drop in sales and house prices in 2009. (Source)
The Canadian national average last month was $337,231 – up from the $282,691 recorded in November 2008. (The most notable gain was in Vancouver were the average went up over $110,000 to $622k)
Since the beginning of 2009 to the end of November, some 437,507 homes have been sold through Canadian MLS® systems. This is up 5% from activity in the first 11 months of 2008.
Earlier this year, I was watching the Economic Outlook 2009 in Toronto and Craig Wright, Chief Economist of Royal Bank of Canada half-jokingly said: “Economic forecasts are never wrong, they are either early or late.” Considering the forecasts made last December, that statement now sounds ominous.
In 2009 interest rates were slashed to historic lows. Some buyers became more concerned with the monthly carrying costs rather than what the overall mortgage amount would be. “Condo camp-outs” have reappeared as people wait in line to purchase new units.
But this real estate surge might soon be tempered – and not just by the increased interest rates coming in mid-2010. Finance Minister Jim Flaherty is now warning he might step in by raising the minimum down payment amounts and shortening the maximum amortization periods. Depending on by how much he tweaks the mortgage rules, it could cut off a vast amount of first time buyers from the market…and we’ve discussed before how important first time buyers are to keeping the market & prices stable.
Is it a case of closing the barn doors too late? With the threat of tighter rules and increasing interest rates, will we see a surge of buyers in the coming months? 2010 will certainly be an interesting year.