The long shadow over Canada's housing market
"A a period of stagnation or slowly falling prices, coupled with weak home sales and waning construction activity, would cut off one of the engines that drove impressive economic growth and job creation in the years before the 2008 financial crisis".
"Market forecasters are near-unanimous in the belief that prices will fall in the coming years, though few foresee the sort of rapid declines that savaged the American market. The stateside disaster was largely fuelled by loans made to people who weren't creditworthy. Canada's problem is different – easy credit is luring people into buying houses they may not be able to afford when rates rise to more historically normal levels. That's why economists and market watchers foresee a drawn-out retraction of the market that will gradually erode prices, rather than a crash".
"And while supply and demand are keeping prices firm, few expect that to last over the next two years. CIBC World Markets has suggested prices could fall as much as 10 per cent in the next two years, as has TD Bank".Read the full story here.
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