Looking back on the boom in Canadian home building from 2002 to 2008, it is now clear that unsustainable price increases drove unsustainable levels of building. This overbuilding will weigh on markets over at least the next three years. Even as Canada recovers from the cyclical downtown, house prices will only rebound sluggishly and new residential construction will remain depressed, owing to this structural weakness. While newly built houses were being rapidly purchased by new homeowners during the housing boom, our view is that house prices exceeded the value of housing that was justified by fundamentals by approximately 9% nationwide during 2004-2008…particularly on the Canadian prairies.
Overpriced and Overbuilt: Canadian Housing Market Returns to Fundamentals: TD
Thank you to Crikey for the heads up.
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Royal LePage Vidorra