Toronto Star is reporting an expected decline in housing prices in Canada.
Housing market continues to cool down - thestar.com
Housing prices climbed steeply in urban Canada at a time of moderate wage increases and job losses. This could not have been sustained over the long run. At the end of the day, mortgage rates would climb and the affordable mortgages would suddenly become unaffordable. Speculation can help with housing prices, but only for a short time.
Many economic forecasters and observers have started to call the current slowdown in the United States a double-dip recession. The stimulus funds are running out and suddenly the economy seems to be applying breaks in the United States. this again is not good for the Canadian economy that send 70% of its exports to the United States. With the exports falling in Canada, the job markets would falter shortly afterward and then the resale housing market will experience a decline.
Also reported in the Globe and Mail is the concern that housing starts in Canada re slowing down. This should have a lot to do with Ontario. The new HST adds an additional 8% to the purchase price of new homes over a certain threshold. The tax was introduced in July 2010. This sudden increase in price was expected to drive consumers away from the largest housing market in Canada, i.e., Toronto. Builders should have known this and they adjusted their supply chains accordingly.