Friday, April 18, 2008

Boom and bust

OK. So you've no doubt heard the news that Canada's housing boom is slowing. "Canada's Housing Boom Officially Over," if memory serves, was the early headline on the Globe's story about resales tumbling 22% in Toronto during the first quarter (although I note they've since toned down the doomsaying a tad.)

As I've said before, as a non-owner looking to buy at some point in the relatively near future, I'm not holding my breath for an outright crash. Toronto is a vibrant city with a fairly strong, diverse economy and a growing population. All the elements for a natural increase in house prices are there. But that's not to say I don't look at charts like this and wonder where it's all headed.

Still, I'm not nearly as pessimistic as this U.S.-blogger is. As much as the schadenfreude drips off the page, I have a hard time arguing he doesn't make a few rational points.

Ultimately, I don't expect any pain here to be anywhere near as bad as it's been in pockets of the U.S. I raised my eyebrows at the advent of 30+ and 40+ year mortgages in Canada, but the fact is, they still remain a tiny part of the overall picture in Canada.

But as long as there are people like my real-estate obsessed colleague telling me how she's already "made" $11,000 on the condo she bought in March (because the identical unit one floor up just sold for that much more) I know there's still a ready supply of people looking to join the game, confident that the music isn't about to stop.

Depending on a greater fool than I to come along in a few years time and take it off my hands isn't the strategy for me. I'm going to wait and see how this plays out.

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