Canada Migration

With housing prices collapsing in parts of the United States, many Canadians are wondering if the same fate awaits the real estate market in Canada.

Housing experts themselves are divided on that question.

Ted Tsiakopoulos, Ontario regional economist for the Canada Mortgage and Housing Corporation, laid out the optimistic case.

“We don’t see a U.S.-style housing market meltdown in Canada for three very important reasons,” he told Canada AM on Monday.

• Canadian housing prices have grown in a “steady, sustainable way”
• Mortgage arrears are at a low level, which suggests financial institutions have been prudent in their lending practices
• Canada’s overall economic fundamentals remain healthy

In mid-March, however, the Royal Bank reported that home ownership costs have risen to the highest point since 1990.

That year marked the “peak of the housing bubble,” it said.

However, the bank was optimistic the current situation should ease. “Going forward, falling mortgage rates, cooler forecast house price gains and decent income growth should all lead to improved affordability across most markets,” it said.

Tsiakopoulos said the CMHC sees moderate price growth continuing. But Ontario MP Garth Turner has a different view.

The author of a new book, “The Greater Fool: The Troubled Future of Real Estate,” Turner thinks the pieces are in place for a real estate collapse in this country.

The U.S. financial sector has been rocked by subprime mortgages, which essentially provided a way into real estate for people who wouldn’t qualify for conventional mortgages. But Turner told CTV.ca the real story is that housing prices in the U.S. got more expensive than Americans could afford.

In Canada, real estate prices have essentially doubled in five years. Turner said he didn’t think that was a “reasonable” increase.

Over that period, household incomes have stayed essentially flat, he added.

Source: CTV.ca