Canada's housing crash beginsBy Joe Castaldo | September 14, 2012
In just one year, Vancouver house prices have dropped by 12%, and unit sales are plummeting in both Vancouver and Toronto.
People have been predicting a crash in Vancouver for years, of course. What’s different now is the growing number of trends suggesting its imminence. The poor global economy is souring foreign investors’ appetite for expensive property overseas. The federal government, meanwhile, is trying to tame the market by tightening mortgage lending standards and warning the public at every opportunity that Vancouver is a risky city for buying real estate. Interest rates are still low, but the Bank of Canada keeps promising to raise them, which would quickly lower affordability. All of which leads David Madani, an economist with Capital Economics, to conclude: “The Vancouver market has cracked.”
Vancouver won’t be the only one. The next market to crack will be Toronto, starting with the city’s overheated condo segment.