Tuesday, August 10, 2010

Canadian Housing Boom Ending?

A Canadian reader tipped me of this story that indicates that the Canadian housing boom that I have previously discussed might be ending:

"Canada led in the global housing recovery in the first quarter of 2010, but moderating global growth, heightened financial market volatility and sluggish job creation have led to a “dramatic” slowdown in Canada, according to the Global Real Estate Trends report released Tuesday from Scotia Economics.....

...The recent slowdown has been most dramatic in Canada,” Warren noted. “Average home prices in (the second quarter) were up just 6.8 per cent year-over-year, compared with 16.6 per cent year-over-year in (the first quarter). Sales, while still at a high level, have trended steadily lower alongside reduced affordability and exhausted pent-up demand.”

For instance, figures from the Canadian Real Estate Association released last month showed seasonally adjusted national home sales activity via the Multiple Listing Service Systems fall 8.2 per cent in June from the previous month. Sales fell in almost 70 per cent of local markets."

While this might just be a temporary setback, the most likely scenario is that it represents the end of the boom, particularly with the Chinese and U.S. economies both cooling.