According to RBC we are experiecing a "Housing Downturn- Canadian Style"
Let me explain...
For the past two years we in Canada watched as the US and UK experienced a housing collapse fueled by overpriced housing and extensive speculation leading upto the correction. When was it coming here? Well it is here and as the RBC Economic Report -Housing Trends and Affordability indicates Canada is in a much better position than either the US or UK.
Primarily the subprime mortgage portfolio in Canada is not as large a percentage of the overall mortgage market as it is in these other countries. It is true that Canadians are carrying increased debt loads than they have in the past but they are not overstreched. Also we have not experienced the high level of speculative behaviour in the new construction market that these two countries have been through. Housing inventories according to CMHC are slowly balancing to better meet demand. Simply we do not have a large over supply of new housing sitting around. In fact in Niagara-on-the-Lake we have practically no supply of this type of housing and resale market inventory is just a small percent below the 2007 level.
Consumer confidence has been shaken. Across Ontario we are witnessing sales activites drop considerably from 2007 levels. According to the RBC, Ontario is "succumbing to the economic blues" and this downturn will not be as drastic as the one in 1990. RBC identifies that housing affordability has not been eroded.
Across Canada in 1990, over 60% of our income went towards housing costs. Today in the Niagara Region that figure stands around 25-28%. (depending on the housing style you occupy) Interestingly that figure is lower than the average in Ontario, where the average family contributes 29-50% of their income to housing costs.
The key message is that there is no price bubble in Niagara and our community is very affordable and well positioned to attract home buyers into the next several years. Our local market is in balance and trending towards a buyers market in some areas. This fact is supported by the local MLS sales to new listings ratio which is in the 0.4-0.6 range. Niagara-on-the-lake's ratio for November was 0.55 indicating a balancing market that is closer to a seller's market than the rest of the Niagara Region. November unit resales were just 1% below 2007 figures and year to date unit resales are down 20% from 2007 levels.
If you are a buyer don't wait too long for NOTL seller's to accept sale prices below their current market value. Sellers today are receiving market value for their homes. This should not be confused with seller's adjusting their asking prices which may not be in line with actual market value. This adjustment will occur as seller's adjust thier expectations. The gains that seller's expected in the fall are not true for today.