It could be a long wait for affordable city homes
Wendy Mclellan
Province
Hopeful homebuyers waiting for the Lower Mainland’s runaway house prices to stumble so they can get into the market could be a waiting a long, long time, says one of Canada’s top-ranked economists.
“House prices here have become really unreachable,” said Sherry Cooper, chief economist for BMO Nesbitt Burns, who was in Vancouver yesterday to speak to business leaders about Canada’s place in the global economy.
“I think house prices are going to slow — they already have in Toronto — but I don’t see them dropping.
“It might happen when the majority of the baby boomers reach their 70s and they can’t walk up the stairs any more, or want to downsize. That would lead to a glut of houses on the market.”
If Cooper’s prediction is correct, that means house prices may drop in 30 years.
Meanwhile, people are signing up for huge mortgages to get into the real-estate market. She said Canadians used to focus on paying off their mortgage by their mid-50s, but with financial institutions offering 30- and 35-year amortizations and the median price of a home in Greater Vancouver reaching $500,000, it may take an extra decade to pay off the mortgage.
House prices, the dollar and the price of gas are all increasing, Cooper said, but the Canadian economy is in excellent shape and she sees no sign of a recession.
“Our economy is the second strongest in the G7 and the stock market outperforms every other country. I don’t see an accident waiting to happen,” she said.
Cooper also doesn’t predict any big change in interest rates.
Construction: Housing starts plummet
OTTAWA — Housing starts fell by a dramatic 13.3 per cent in April from one year earlier, a surprising signal of weakness in what has been a buoyant sector of the economy.
Residential construction starts dropped to an annualized rate of 218,100 last month, down from a revised figure of 251,700 reported in April, Canada Mortgage and Housing Corp., said yesterday.
© The Vancouver Province 2006