Canada House Prices Falling Faster Than USA 2008 Bubble

[Economy 53,160]

https://thehub.ca/2023-02-23/trevor-tombe-we-could-be-undergoing-the-sharpest-housing-contraction-ever-and-homes-are-still-historically-unaffordable/

 

Canada is experiencing what may prove to be the sharpest contraction in real estate prices in its history with National home prices down 13% year over year and 15% under all time peak. A faster rate than America's 12.8% drop in 2009 after the US financial and realestate crisis

 

In expensive markets and suburbs some drops have surpassed 20% and a few markets nearly 30%

 

However despite the steep drops most economists do not see a Simmilar ultimate outcome to the United States crisis as a result of:

- better regulated loans

- banks with higher capital reserves to absorb losses

-tougher downpayment rules 

-the fact that surge in prices was so rapid near end of peak that even a 20% drop would only reverse 1 year of gains meaning few people are actually likely to end up in an underwater mortgage

- fast population growth and a chronic housing shortage is unlikely to allow prices too fall too far and prices will likely stabilize

 

Still for anyone who purchased a home in the last 1-2 years they may face some pain. In addition most economists do not believe the price declines are over yet as interest rates remain high by recent history standards

[Economy 53,160]

2 minutes ago, Meta Mart said:

S H I T

Tbh this is a good thing. Prices have gotten to a point where it's literally just outright Blizzare

 

I saw some stats that in the US during the peak of housing bubble in 2007 home prices reaches 7X average income

 

In Canada at its worse point it reached 13X annual income. That's how bad it is and why 2 family homes, or generational homes are so insanely common now. No one can afford a house to themselves anymore unless they are over 50 and bought it a long time ago

 

We need this correction

 

But given the housing shortage, the moment interest rates drop some, prices are immediately gonna start rising again

 

 

[RAMROD 118,107]

Maybe it's time to to get a house that you want now, Economy

[Economy 53,160]

28 minutes ago, RAMROD said:

Maybe it's time to to get a house that you want now, Economy

I still can't afford one . They need to fall like another 60%

[dit 46,738]

2 hours ago, Economy said:

Still for anyone who purchased a home in the last 1-2 years they may face some pain. In addition most economists do not believe the price declines are over yet as interest rates remain high by recent history standards

so is there hope it can decrease even more? Should one wait until next year to make a downpayment? 

[Economy 53,160]

13 minutes ago, dit said:

so is there hope it can decrease even more? Should one wait until next year to make a downpayment? 

It may still fall further yes. But it's not necessarily easier to afford it now tho cuz the drop in prices is just reflecting higher interest rates and ppl simply can't bid the prices as high

 

If I had the income rn to afford a house, I'd probably buy sometime later this year closer to a bottom in prices, then take out a variable interest rate cuz rates should start to drop in the next 6-12 months (in theory) so I'd have highest rates for a short time

 

Better to buy prices at the bottom and rates at the top than to buy prices at the top and rates at the bottom

[dit 46,738]

2 hours ago, Economy said:

It may still fall further yes. But it's not necessarily easier to afford it now tho cuz the drop in prices is just reflecting higher interest rates and ppl simply can't bid the prices as high

 

If I had the income rn to afford a house, I'd probably buy sometime later this year closer to a bottom in prices, then take out a variable interest rate cuz rates should start to drop in the next 6-12 months (in theory) so I'd have highest rates for a short time

 

Better to buy prices at the bottom and rates at the top than to buy prices at the top and rates at the bottom

Thank you. Does having a huge down payment help off set interest a bit cuz you won’t need a bigger loan? So if one saves up to have a big down payment that can cover like one third or one fourth of the house price would that help? 

[Economy 53,160]

2 minutes ago, dit said:

Thank you. Does having a huge down payment help off set interest a bit cuz you won’t need a bigger loan? So if one saves up to have a big down payment that can cover like one third or one fourth of the house price would that help? 

Well of course!

 

Down payments make a bigger difference when prices are lower but interest rates higher than when prices are higher and interest rates lower