Fears of a Canadian housing market crash
overblown
You may have noticed a lot of stories in the press recently
about a significant risk of a collapse in housing values.
These concerns are based on the belief that the increase in
house prices we’ve seen in the past several years have
created a housing bubble.
To better understand current housing market trends, we have
looked back at the level of housing affordability that
prevailed in the late 1980’s and early 1990 when a real
estate bubble caused the Canadian housing market to meltdown
in the years that followed. While it is true that housing
affordability has deteriorated in recent quarters, it
remains much better than it was in 1990.
We believe that the modest erosion in affordability will
cool the housing market but will not create a deep freeze
effect. Home prices overall are expected to maintain their
values nationally, though some local areas with very poor
housing affordability, such as Vancouver and Montreal could
experience declines in home values.
What does that mean for homebuyers?
Now more than ever it is important for homebuyers to get the
right advice from knowledgeable real estate professionals.
By understanding market trends in their area potential
homebuyers will be able to make informed decisions about
value for money.
By working with an RBC mortgage specialist potential
homebuyers can also review their options for true
affordability, today and in the future.
RBC publishes free research information about housing,
including pricing trends by province and city, in the RBC
Economics Housing Trends and Affordability Report. It’s easy
to stay informed. Register at www.rbc.com/economics for
automatic email delivery of new reports.
The following is a link to our Home, Mortgage and Lending
Advice Centre.
