Buying a home in the US right now is a pretty good idea. Prices have come down 30% from their highs in 2006 and the cost of owning is cheap compared to renting. However it’s not the same story on this side of the border. What goes up must come down right? well apparently not when you’re in Canada.
The US went through a housing correction because of ninja loans and subprime lending. In Spain, the housing bubble popped because they had about 23 million houses, but only 16.5 million families, lol. There wasn’t a real demand to build so much. Recent data now shows Canada’s home prices may also have hit its peak. There are lots of listings in Vancouver but not a lot of homes are selling. The amount of properties bought in June hit a 10 year low. A 27.6% drop from the same month last year. In Toronto the drop is less severe at just 13%. Common sense tells us if there is a large amount of supply (homes) but not a lot of demand (purchases) then this puts downward pressure on housing prices. It’s a buyer’s market now :).
Are we going to see a major correction here? I don’t think so. The demand here appears to be real. Vancouver has a vacancy rate of 2.4%, and Toronto’s is 1.6%. Those are pretty low numbers. We can’t have 0% vacancy because if all the homes were 100% occupied then how can we accommodate new people moving into the city? So I think the boom in residential developments (condo constructions) in major metropolitan areas are warranted to plan for future urbanization, immigration, etc. We might see a 5 to 10 percent downward movement for the average price of a Canadian home, but nothing major is likely to happen.
Random Useless Fact: A study which polled over 2400 women concluded that the average woman spends nearly 1 year of her lifetime trying to decide what to wear.