A day after the RBC released a report saying there is no condo bubble in Toronto we get a conflicting report from Capital Economics.
Not only do we have a housing bubble problem in Canada, it appears to be peaking and bursting right now.
Economist David Madani says get ready for a 25% drop in prices.
The thing people always seem to forget when it comes to housing markets is that they move SLOWLY.
Housing prices typically respond to changes in the market with a lag of five to nine months, according to Mr. Madani. He points out that home sales have already seen material declines, down 4% over the last two months. Vancouver in particular has been hard hit, with sales down 28% year-over-year.
“Overall, the willingness of buyers to pay these historically high house prices now looks to be proving fragile against the increasingly disappointing macroeconomic backdrop,” he said. “The housing bubble in Vancouver already appears to be deflating, with only Toronto defying the inevitable. Accordingly, we expect substantial declines in house prices over the next year or two.”
Check back here in two years to see whose prediction was more accurate: RBC or Capital Economics.