Former MP and real estate author, Garth Turner, was on Globe Investor Thursday delivering his trademark warnings about real estate.
He told the Globe’s Rob Carrick that home prices would fall 15% nationally, 20% in Toronto, and 40% in Vancouver.
He said Canada’s real estate fall “has the potential to be as bad as in the United States." (U.S. home prices fell much more than 15%, however, toppling 30% from their May 2006 peak.)
On the other hand, Turner said Canada’s “financial system safeguards” should insulate us from a meltdown. According to Turner, these safeguards include lower levels of mortgage securitization and CMHC’s backstopping of mortgages through its default guarantees.
Nonetheless, Turner says, "Get used to being poor if you just bought a house." He predicts it could take 10-15 years before prices recover…once they start falling.
Sidebar: Anyone who follows the markets knows a 15% price drop is realistic. In fact, market corrections are natural and 15% is far from catastrophic. Turner’s call on housing prices is, therefore, not really “news” or prophetic.
Turner made some critical comments about CMHC (calling it a “dirty old mom,” etc.). The media has been picking on this rhetoric and it’s perpetuating a hoard of misinformation. We’ll run a story on this topic in the following week.
We do applaud Turner for one thing, and that is raising the level of concern. It’s sometimes good to alarm homebuyers a bit–just enough so they don’t overbuy or overextend themselves. In this way, like him or not, Turner adds value.