For every doom and gloomer out there in the world of real estate forecasting there is an optimist... and one of them is always right. So where is the Canadian real estate market heading in 2013? I for one am not too worried.
Experts seem to agree that the only possibility of a 'crash' in the national real estate market would be a result of a rather large spike in interest rates in the short term. Benjamin Tal of CIBC world markets notes that "Crashes don't just happen in a vacuum, you need a trigger," and most people don't expect a sharp increase in the prime rate anytime soon. "If you have a gradual increase in the rates this [crash] doesn't happen." Tal went on to say.
With nationwide sales down and Calgary the only major market to post an increase in sales year over year that doesn't mean that a slowdown is impossible. If we see a gradual increase of interest rates over the next number of years we'll see the end of homes selling for 10% over asking, but it will be a soft landing in most areas.
Where you're living is going to play a huge factor in what the new year brings. Vancouver saw drop in sales of over 20% year over year, Calgary saw an increase of 18.6%, and Newfoundland was down 11% while the national average was down approximately 1.1%. Even a small geographic change can show drastically different number with Toronto showing a nearly 5% drop and the Durham Region directly east showing a 12% increase year over year.
If there is a softening it does seem more likely that we'll see some sellers decided to stay put or take their homes off the market if they cannot realize a sale price that they are comfortable with. Rather than see prices plummet I expect to see only marginal increase in nationally.
"In the U.S., you had to sell your house because you were delinquent" said Benjamin Tal, while here in Canada our worst case scenario seems likely to be a stagnation of prices in the short term.
There are always going to be economist, writers, and neighbours expecting the bottom to fall out. When they start selling their homes and renting apartments I'll start to listen more closely.