Category Archives: predictions

The Flat Market Fantasy

It seems that everywhere around the world that house prices lept up quickly there was always someone predicting a ‘plateau’.  The idea that even if the market is overpriced the correction won’t come in the form of a crash, but instead property prices will stay flat and wait for income and rents to catch up.  This prediction is of course being applied to the Canadian real estate market as well:

Matthieu Arseneau, a senior economist with the National Bank, likes mortgage payments as the best yardstick. That’s because the evidence tells him that the rise of interest rates from today’s bargain-basement levels will be moderate. Based on this, he thinks it’s silly to foresee a housing crash, since monthly payments won’t get into distress territory even by the time rates peak in about three years.

That’s why Arseneau dismisses apocalyptic talk about a housing crash in Canada. As a cautious analyst, he doesn’t rule out any scenario absolutely, but Arseneau said Monday that this one is awfully unlikely: “I think there will be no collapse unless there’s a worldwide recession and credit crisis.”

Of course these comments regard the Canadian real estate market, not the Vancouver market specifically.  Can anyone name any real estate markets that have reached Vancouver levels and then gone flat?

Full article at the Ottawa Citizen.