Recent popular belief is that Canada will fall into the disastrous economic situation that has crippled the U.S. economy. As our economy is affected by what happens south of the boarder, it is important to understand that we have been able to maintain a solvent banking system (where the U.S. has failed) and our government has implemented measures to prevent a collapse of our real estate market (no more 40 year amortizations with zero money down). The U.S. is suffering due to the vast number of mortgage defaults and questionable lending policies. These factors alone have our Prime Minister feeling confident we will avoid the facing a similar situation to that in the U.S.
We will see a decrease in sale prices and housing inventories will rise, but this adjustment is simply to bring back balance to the market. As Canada has avoided the dreadful banking situation and sub-prime lending, the financial institutions are not in jeopardy. Canada has recently been rated as the ‘World's Soundest Banking System' according to a world economic forum report on global competitiveness. The U.S. was rated 40th, just below economic powerhouses such as Estonia, Barbados and Namibia.
We are fortunate our government monitors our financial systems much more closely than our ‘Wild West' cousins to the south. It is for this reason we have avoided a similar economic meltdown. Most economists feel that we are headed for a market correction rather than a crash. Some markets within Canada have been growing at such an unsustainable rate that there is a correction presently occurring to bring back balance.