The truth About The Housing Market Crash in Canada
It’s been a taught year, for all of us and what happened until now seems to not be enough. We keep hearing negative news about economics, housing and stock markets, but what is the real truth?
Are you an investor or just middle class Canadian who wants his American dream to become true this year and to finally buy a dream house? I would like to recommend you to look at some numbers and take some conclusions based on them.
Everyone is talking about Canadian Housing Market crash, but what I realized, no-one is looking back to the statistics. I would like to present you a couple of charts from CREA (Canadian Real Estate Association) showing how house prices changed during last 15 years in Canada.
Looking at the chart we can see that if you’ve bought a single family house in January 2005 and would sell it as of October 2020 you would have a 158% price increase. Yes we had few corrections during this period but they were not very significant and lasted usually 12 to 24 months.
Another interesting chart is how prices are changing month over month for the last 15 years. This chart is not looking so appealing but we should think of house like of a stock. When you buy a stock it can cost today 100$ but tomorrow go down to 50$ and in few months after that go up to 200$. Prices are always fluctuating and very sensible to what is happening with economy, but buying long term you will always will be in profit.
If we calculate a monthly average price change for single family house for the last 15 years in Canada it will be +2271.9$, yes, every month you live in that house it is going up on average ~2271$ it is probably more than you’re paying for the mortgage or your rent currently.
In conclusion I would like to say, there will not be a housing crash, there might be a correction in prices but for a short period of time only, most probably when interest rates will go up again. That being said, do not try to time the market, if you can afford a house and you want/need it you should buy it, in the long term you’ll always be in profit.
All the above statistics were taken from CREA website and are based on all Canadian aggregate data. You can download spreadsheet will all the statistics by clicking on the following link: https://creastats.crea.ca/en-CA/
