Canadians are prone to worry; it’s just one of those things that we’re really good at. And when homes in Vancouver are averaging prices of over $750,000 for a single detached; and the average amount for a Toronto mortgage is $650,000, it seems like there’s a lot for us to worry about. But we should stop. Stop with the worrying, and stop with the panic. Because according to the latest Scotiabank Global Real Estate Trends, we’re still outshining the rest of the world.
One of the reasons why we shouldn’t worry is because right here at home, the market is starting to cool. The report found that in April of this year, there was a 1.6 per cent decrease in the national average price of a home. Compared with April of last year when prices were still increasing an average of 1.3 per cent, and it’s easy to see how prices are now starting to move in the right direction – and at the right pace.
In the report Scotiabank economist Adrienne Warren wrote, “Price trends are relatively steady in the majority of local markets, though a few, notably Toronto, continue to report strong appreciation.”
The report also suggested several reasons for the cooling that’s now occurring – slower than usual income growth, tighter rules on mortgages and second mortgages, and the fact that more homes are starting to appear on the market throughout the country.
So how does all of this compare with the rest of the world? Quite well, says Scotiabank.
Europe is still going through a huge recession, and their property values are taking the hit to show it. In Ireland prices fell by a staggering 18.9 per cent, and Spain has just recently experienced a housing crash with property values falling 9.1 per cent from where they were last year. It was here in Spain where European finance ministers offered C$100 to help bail the Spanish banks out; but economists and those in the market didn’t feel as though this would be enough to help. And, it’s not going to end any time soon.
Warren also wrote in the report, “The intensifying euro zone debt crisis, increasing financial market strains and moderating global growth suggests there is more downside risk to property prices in the near term. Eventually however, improved housing affordability and pent-up demand will put many of these markets on a firmer footing.”
So there it is. It’s time for us to stop worrying and to start preparing for that 15 per cent drop that TD warned us was going to happen in the next 2-3 years. It’s the soft landing we need, and it will be nothing like the crashes happening in the States or any other part of the globe. It may just be time for Canadians to stop worrying, and to start breathing.