Fears of a Canadian housing market crash overblown

You may have noticed a lot of stories in the press recently about a significant risk of a collapse in housing values. These concerns are based on the belief that the increase in house prices we’ve seen in the past several years have created a housing bubble.

To better understand current housing market trends, we have looked back at the level of housing affordability that prevailed in the late 1980’s and early 1990 when a real estate bubble caused the Canadian housing market to meltdown in the years that followed. While it is true that housing affordability has deteriorated in recent quarters, it remains much better than it was in 1990.

We believe that the modest erosion in affordability will cool the housing market but will not create a deep freeze effect. Home prices overall are expected to maintain their values nationally, though some local areas with very poor housing affordability, such as Vancouver and Montreal could experience declines in home values.

What does that mean for homebuyers?

Now more than ever it is important for homebuyers to get the right advice from knowledgeable real estate professionals. By understanding market trends in their area potential homebuyers will be able to make informed decisions about value for money.

By working with an RBC mortgage specialist potential homebuyers can also review their options for true affordability, today and in the future.