This past November saw home prices across Canada declining, making it the 12th month in a row to see such year over year decreases. That has again brought the question of a price correction to the forefront.
Terenet National Bank just released their Bank Composite Price Index report, which showed that nationwide there was a 0.4 percent drop in prices between November and this past October. Also noted, was that this was the first time since February of 2009 that of the 11 metro areas surveyed, ten of them saw a monthly decrease.
Calgary was that one city to see an increase, coming in with a 0.4 percent gain over this past October. Edmonton, Halifax and Victoria had the highest rate of decline, at 0.9 percent. Winnipeg saw a 0.7 percent decrease and Vancouver came in at 0.6 percent. Hamilton, Toronto and Montreal showed a 0.3 percent decline, while Quebec City was down only 0.1 percent.
Terenet noted that this was not all much of a surprise considering the decrease in sales following the mortgage rules revamping this past July. Masen Issa, from TD Securities, expects the decrease in prices to continue into 2013 and beyond, followed by a gradual recovery.
Vancouver appears to be almost corrected, with Toronto soon to follow. Issa expects that over the course of two or three years, prices will correct nationwide by between 10 and 15 percent. It is possible that the market will see resurgence earlier, particularly if the interest rates remain low. The problem with this is what happens when the interest rates eventually go up, which they will. Mark Carney, Governor of the Bank of Canada sent out warning earlier in December about overextending personal debt, and this includes home purchases.