According to Canadian Real Estate Association statistics, average national home prices have fallen 10 per cent since the heights of April this year.
Change is attributed in part to the Bank of Canada raising interest rates for the first time in years, as well as provincial legislation in Ontario and B.C. aimed at slowing skyrocketing prices in Toronto and Vancouver.
But is this dip in price a blip, a soft landing, or the bursting of a bubble? Here is a direct audio link.
As we listen to this mainstream discussion about whether ‘bubble’ is a fair term for Canadian realty prices, we can consider this chart comparing Canadian real home price moves (in blue) with the US (in orange) over the past 42 years. Note the US infamous subprime driven-price peak in 2006 (in orange) and the -40% average decline that followed and has not yet recovered a decade later.
In all the circumstances, Canadians would be unwise to think that our price cycle should be kinder.
Even for those that are able to keep making their debt and upkeep payments as rates rise and/or incomes fall, the cash flow they have left to pay for other living expenses and save for the future will be diminished for years while current debt levels are worked down.