Housing Boom: All Things Must Come to an End
All things (good or not) must come to an end, or so says Scotia Economics in its new report titled, “Global Real Estate Trends”. Of course Scotiabank is referring to the housing market, which is currently in a frenzy. However, the second half of 2010 is expected to be quite subdued due to the usual three reasons: the rush to qualify for a mortgage before the new lending rules officially come into play (any day now), rising interest rates (already starting to rise), and of course, the introduction of the HST in both Ontario and British Columbia.
By the time all of the above have come into effect, the first half of 2010 will have passed by. What happens then?
With higher interest rates and home prices impeding affordability, the real estate market should expect to see a slowdown starting in the second half of 2010. Several experts agree that this is likely to stop any continued speculation of a housing bubble.
According to Scotiabank, the last decade has seen the biggest real estate price appreciation in over 50 years and construction of new homes has been at its strongest since the 1970s. Scotiabank’s senior economist, Adrienne Warren, states that the expectation is that 2010 will be a transition year between the housing boom of the last decade and a “sustained period of more subdued housing activity over the coming decade”.
The End of the Global Housing Boom
Over at CIBC World Markets, senior economist Benjamin Tal, agrees with Scotiabank’s Warren, adding that not only is Canada coming to the end of the real estate boom, but so is the rest of the global community. He feels that the next decade will be defined by deleveraging as investors in the U.S., Canada, and Europe become gradually more cautious with their money.
