Here’s a report by BMO Nesbitt Burns comparing the U.S. and Canadian housing markets. The author poses the question of whether Canada is two years away from a U.S.-style correction. (See the chart)
Concern is building because Canadian home sales have dropped 13% versus one year ago. Price gains have slowed to 1.8% annually.
"It’s a bit unnerving to see how Canadian performance is starting to look like that of the U.S…" says BMO economist Doug Porter.
Indeed it is. On the other hand, it’s important to note that anagrams (comparisons of chart patterns) are far from reliable. That’s because the factors influencing such charts are part random and part country/economy-specific. The hiccup in Canada’s housing market could therefore theoretically end tomorrow, despite the recent similarities between American and Canadian price charts. (Although, honestly speaking, we’d be surprised if it did.)
If you’re shopping for a mortgage, try not to let any of this affect your decision. Studies have shown that there is virtually no way for most mere mortals to time the housing and credit markets.
Sources: Globe Investor; Bank of Canada
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