Canadian House Prices: More Pain to Come

The downward trend in Canadian house prices continued in February, registering a year-over-year decline of -4.1%. Leading the retreat were declines in Calgary (-8.1%), Vancouver (-6.4%), Toronto (-5.0%) and Halifax (-0.5%). House prices in two other cities remained positive: Montreal (3.2%) and Ottawa (2.8%).

These readings are from a new index of resale-house price changes, the Teranet–National Bank National Composite House Price Index. It is a less biased measure than changes in average prices because its repeat-sale methodology controls for changes in the mix of houses over time.

On a month-to-month basis, house prices fell -2.0% from January to February. Toronto (-3.1%) dropped the most, followed by Vancouver (-2.0%), Montreal (-1.2%), Calgary (-0.7%), Halifax (-0.5%), and Ottawa (-0.2%).

Since peaking in August, 2008, house prices have fallen -7.4%. Declines for the six cities from their respective peaks were: Calgary (-12.0%), Vancouver (-10.2%), Toronto (-9.0%), Halifax (-4.0%), Ottawa (-3.8%), and Montreal (-1.6%).

It’s a good thing it’s not as easy to walk away from a mortgage as it is in the U.S. Otherwise, Canada’s banks would be in more of drubbing along lines of U.S. banks. Still, as it stands, there is going to be a bit of pain.

Comments

[campo]

You offer no evidence for your conclusion in this article. In my area near Vancouver, the market is moving. There isn't as many foreclosures as in the US because people in Canada have equity in their homes. In the US, mortgage interest is deductible. It isn't in Canada. So in the US, there is a tax savings when you buy a car or boat, etc. by adding to your mortgage. Not so in Canada. There are a few underwater properties in Canada, but those will be mopped up quickly. 10% coming off this market, which has doubled in the past 5 years is just a correction, not a meltdown. Mortgage money is the cheapest in history. I don't see a protracted slump in housing here.

2009 Apr 30 10:07 AM

[dynacode]

In my area, south of Montreal, QC, everything looks OK but moving at a bit slower pace than before. About the same conditions Mr. Campo describes in the comment above, apply here too.

2009 Apr 30 02:24 PM