In an otherwise dismal report (regarding global housing prospects), the International Monetary Fund highlights Canada as one of the few countries experiencing a rebound in home mortgage and real estate markets.
The World Economic Overview recently released by the IMF – although panned by the Canadian press under alarming headlines such as “Housing Prospects Dismal” – counts Canada (along with most Scandinavian, and several Asian-Pacific countries) as ‘Rebound Economies’ featuring “a rebound in house prices and residential investment and a stabilization in [residential] construction.”
While the IMF report notes that while “the real estate boom between 2002 and 2007 was synchronized . . . the subsequent bust was not.” Broadly speaking, the report differentiates between “bust economies” (including most of the world’s advanced economies) and the aforementioned ‘rebound economies;” and, while the outlook for Canadian mortgage and housing market is guardedly optimistic, the IMF forecasts that markets in the U.S. and Great Britain may face a so-called ‘double-dip’ in their real estate markets – bad news for many American homeowners whose mortgages are already underwater.
Canada was included with Scandinavian and Asia-Pacific countries, as the recoveries of their real estate markets have been similar. The IMF does note, however, that “econometric estimates still show a deviation of house prices from fundamental values,” while cautioning that Asian markets (without mention of Canada or Scandinavia) are particularly at risk from speculators trying to cash in on the market.
Thanks, in no small measure, to fiscally conservative Canadian mortgage and lending rules, and recent further tightening of Canada’s mortgage rules, home mortgage and real estate markets are generally forecast to return to historical norms without the rapid deleveraging – or ‘crash’ – experienced in the U.S. and U.K.
