The Canadian housing market has proven to be consistently strong over the past 15 years even through a global economic down turn. A significant gap between the average price of a home in Canada and the United States has widened to record levels according to Bank of Montreal’s chief economist Doug Porter.
Average Canadian home prices were 66 percent above average U.S. home prices during the first three months of 2014 based on prices for existing houses and condos. Never in the history of these two great nations has a gap like this occurred. The U.S. housing market always led Canadian housing until the downturn in 2006. Do we believe housing in Canada is truly worth 66 percent more than housing in America? Absolutely not! Although we know U.S. housing is currently undervalued and on the rebound in many markets this is still cause for concern. Many snowbirds and Canadian real estate investors have headed south of the border to buy homes, and why not, at a 66 percent discount and nothing but upside on the horizon it just makes sense.
Canadian home prices seem to be at a peak, flattening out, with many major markets forecasting a slight price correction. We don’t expect any major down turn but a small price adjustment is in order to keep our economy healthy. New housing starts in Canada fell 18 percent in March indicating the real estate market may be headed for a soft landing rather than a steep correction.