Yesterday we polled our readers, asking two simple questions:
1. Has the market peaked?
2. Will we see price declines greater than 10% in the next two years.
Canadian business magazine asked Canadians the same questions a couple of weeks ago. It turns out our readers and Canadians as a whole are pretty much in agreement. I find that quite interesting knowing the situation in Toronto and Vancouver – I thought our readers would be a bit more optimistic. I think Edmonton will out-perform the national average and certainly kick t-dot and vancity’s butts. On the other hand, knowing the comments we tend to get on the blog, I’m surprised our readers didn’t predict a massive crash and burn in Edmonton. Are we overly pessimistic or is the rest of the country overly optimistic?
About Sara MacLennan
Sara MacLennan is the Director of Marketing at Liv Real Estate and a licensed Real Estate Associate. The bulk of Sara’s experience and wealth of expertise lies in on-line technology and marketing both for agents and consumers. Sara is the former National Director for Interactive Marketing for Coldwell Banker Canada where she was responsible for an extensive training program traveling to offices across the country training agents and brokers on marketing and technology. Find Sara on Twitter @edmontonblogger.
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“On the other hand, knowing the comments we tend to get on the blog, I’m surprised our readers didn’t predict a massive crash and burn in Edmonton.”
Renters post more often. That’s all.
A major Canadian housing correction has been a trend I have been forecasting for quite some time. The problem extends far beyond housing though. This is what I wrote on Canadian housing (in general, individual market trends are not my focus) back in April:
link to canadiantrends.blogspot.ca
My outlook for Alberta over the coming years amounts to this:
- With the period of affordable exponential rise in oil price over, and extreme volatility in other energy, Alberta is now stuck with a large infrastructure bill for what is going to become apparent as a general decline in revenue from energy production in relation to the costs required. (EROEI).
- Gov’t service cuts as a result will be eating into savings, as well as prolonged periods of high gas prices as volatility gets worse.
- Food prices will also serve as an addition to increased cost of living.
- Global GDP declines are going to translate into promises of future productivity ranking as riskier and riskier, and also unlikely. The amount of available credit of course will respond appropriately to this.
Alberta is going to have a tough time adjusting to it’s new mini-boom economic reality as “oil booms” will be short term roughly running up the cost from $80 – $100, before affordability causes the price to stall – people no longer have the credit they used to as they did in 2007 to put towards gas they could not afford. That credit is used up. This is going to cause instability in oil field jobs, and a large increase in temporary foreign workers (which is no secret) – who likely will not be the owners of houses, but rather rent – or camp.
Canada’s surplus position pre-2008 insulated the first round, but we are wide open and vulnrable for round 2. I could go on, but I think you get the picture.
When you used the term “a major Canadian housing correction”, you have assumed that the Canadian real estate market is more or less uniform.
As we can see, in the past several years, Vancouver and Toronto went up 50% while Alberta didn’t. My point is, even if your prediction about the average of Canadian market is true (an assumption itself), with a 50% variation among different regions, it’s still a useless prediction.
I guess we have more time on our hands with our maintenance free living
10% decline in the next two years in Edmonton? Wow, thats pretty substantial considering mortgage rules have already been tightened up and interest rates don’t look to be going anywhere. Leading questions though, had it been phrased differently or had more options I think there would have been less negative results.
I think there might just be a lot of hopeful renters on this blog. And maybe not in a “fire and brimstone can’t wait to be a vulture” but more of a “hope I can afford a house in 2 years”.