Real Estate Market Prediction
- 24.09.2007
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Housing crash in US could soon ripple here: Turner
Canada’s booming housing market could feel a chill by the end of the year, thanks to a real estate crash and mortgage crisis south of the border. As up to a million and a half US homeowners walk away from their houses and mortgages, the result has been a credit crunch, a construction bust, sagging car sales and an expected American recession.
According to financial author and Member of Parliament Garth Turner, Canadian families should expect to see an impact in this country, including a real estate softening and economic slowdown.
“Many people think that somehow Canada is immune to all of this,” Turner says, “but the likelihood is they’re wrong. The US is clearly struggling right now to contain a financial crisis and a meltdown in consumer confidence, and a recession in the States is going to have a significant impact on all of us.”
Turner says this is already happening. Recent layoffs at General Motors in Ontario have been attributed directly to the American mortgage and real estate collapse, while sales of higher-priced homes in many markets, including suburban Toronto, have taken a dive.
“This danger is approaching at a time when Canadian families have more mortgage debt than ever before, and as housing prices have hit a record high. Even in areas of the country which are booming right now, such as Alberta, folks need to remember real estate is an illiquid commodity “ it’s only worth what someone’s willing to pay. That inevitably falls in tougher economic times.”
Turner says Canadians have never had as much of their net worth in real estate “ more than 80%, on average “ which makes them undiversified and prone to the kind of misery that’s hit American homeowners. Turner also is critical of Ottawa for increasing federal spending to a level that’s contributed to inflation, higher income taxes and higher mortgage rates, increasing the danger for families.
