Benjamin Tal of CIBC World Markets is saying that we’re currently in a recession and is predicting a 20% drop in BC house prices, and a smaller 10% drop in house prices nationally.
He said Canada’s recession was sparked by slowing growth in the wake of the meltdown of U.S. housing markets. The economy will not begin to recover until American real estate bottoms out, the financial sector stabilizes and until government economic stimulus packages take hold.
Tal said that could be sometime around May next year.
He cautioned that recovery will not be a robust “V-shaped” bounce-back. Rather it will take more of a “U-shape” and will take some time.
Tal said Canada’s housing downturn is a recession-led correction rather than the kind of meltdown that brought U.S. markets low when large numbers of high-risk borrowers defaulted on their loans.
Tal said B.C. is likely to see deeper corrections in real estate prices, largely because values here shot up so much higher and more quickly that in other parts of the country.
“When you double the value of your real estate over the course of breakfast, then you pay the price,” Tal said.
He said the recession still has to run its course, and was in the equivalent of “the sixth or seventh inning” of a baseball game.
I notice that we don’t have any quotes from Tal in the Wiki Quote-tracker, anyone feel like adding some? Thanks to Re-diculous for the link!