Now we have a few months after the Bank of Canada has declared “The Recession is over.” I guess, technically speaking they are probably right, for our neighbors to the North the recession wasn’t quite as bad as for us here in the US, but like here, if you talk to the people on the street, many Canadians will continue to feel the effects still for months to come. As a matter of fact, in the next 12 months Canadians will feel the “Big W” rollercoaster. As I have been telling my Canadian students, we are probably in the middle of the “W”. That is: they are.
What that means is, the economy goes up and down. We will have recessions, we will have booms. However, the housing market in Canada is far better than the housing market here.
Here is what the experts are saying. Gregory Klump, chief economist of the Canadian Real Estate Association (CREA) forecasted the outlook for 2010 as follows:
He said that the interested rates will be on hold till the middle of next year. That means also that the outlook for economic growth looks good. Further, that the depth of the recession is not becoming any worse. Just like over here, economic security is based on consumer confidence
He also advised not to renovate between March and July next year. He didn’t say why, but talking to some of my students, they think it is because building materials will take a short jump, because retailers may think that the recession is over and jack up their prices to pre-recession levels, thinking the recession is over, which technically it is, but has not penetrated down to the retail and consumer market.
Also, job growth isn’t anticipated to pick up till the middle of next year. However, on new listings coming to the market, we will see price increases over the next 6 months.
That’s why, even right now; don’t expect to buy any properties for anything less than 80% of market value.
Of note is also that the Bank of Canada put down any speculation that it would follow Australia in hiking interest rates quickly, advising that favorable economic developments were being undermined by the strength of the Canadian dollar. The bank kept its key overnight interest rate at a very low 0.25% and reiterated its intention to keep it there through mid-2010.
The Reserve Bank of Australia surprised markets on October 6 with a 25 basis-point rate hike, becoming the first of the Group of 20 central banks to tighten credit as the global financial crisis eases.
The bank said growth in Canada in the second half of this year would be slightly higher than previously projected but that growth over the rest of its projection period would be slightly lower on average than it had forecast earlier.
In real estate housing permits rose 3.8 percent on an eighth consecutive rise in single-family units. Multiple-family housing units fell after a big surge the previous month. That is the reason why new listings coming on the market will see a price increase over the next six months.
Building permits rose 18%, but that is due to the strength in non-residential building projects.
So, overall the outlook for Canada in the real estate market is better than it is here in the US, where house prices are still falling across the nation, albeit not as dramatically as before.
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