Housing Markets on Shaky Ground

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Economists say Canada has become one of the safer places in the developed world to own residential real estate.

“The dynamics of house prices in Canada are in line with what we would expect based on fundamentals of the economy,” said Roberto Cardarelli, senior economist at the IMF.
Canada and Austria were the only two of 17 countries included in the study in which house prices appeared to be lower than where they should have been at the end of the period from 1997 to 2007, said Mr. Cardarelli.

For each country in the study, house price growth was modeled as a function of the following: an affordability ratio, growth in disposable income per capita, short and long-term interest rates, credit growth, changes in equity prices and changes in the working age population. The study used data from 1997 to 2007.

Canada is in better shape than many other countries and home prices here aren’t expected to drop this year, said Benjamin Tal, senior economist at CIBC World Markets Inc.

Source: Globe and Mail - April 10, 2008

Personal Note:
This article is based on the trend nationally. Here in Edmonton and Alberta in general our market our market isn't following the national trend. Of course we did not follow the national trend in the previous couple of years when our valuation growth was incredible. Right now the have lots of homes coming on the market... more so than we are seeing the number of buyers coming to the market. This is still indicates to me that we are going to see continued downward pressure on valuations.

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