The impending decline and fall of the Canadian residential real estate market -- as fearlessly forecast by the Baby Boom watchers -- can be summed up in four simple words: "Much ado about nothing."
This wasn't Shakespeare talking, but CIBC World Markets economist Benjamin Tal.
Tal crunched the numbers and found the house price scare when the boomers become empty nesters and downsize as "highly exaggerated."
To the contrary, Tal is predicting that instead of fading "house prices in Canada are more likely to double in the coming 20 years."
SWINGS
Sure housing activity in the coming two decades will "fluctuate and swing," Tal said in the latest CIBC Consumer Watch report.
"But the projected demographic changes in the coming 20 years will not be large enough to dramatically alter housing market conditions."
And a "relatively small adjustment" in housing starts will solve the problem, Tal said.
It's music to the ears of the Canadian Real Estate Association (CREA), which is calling for another big year in residential house sales. With over 450,000 sales predicted nation-wide, this will be "near the strongest levels on record."
While the West's energy boom will once again lead the way, the national average selling price is still forecast to rise "moderately," CREA chief economist Gregory Klump crystalballed.
Klump fingered high employment, upbeat consumers, rising incomes and mortgages that are "low and will stay that way."
He won't get any argument from Bank of Canada Governor Dave Dodge who held the bank's trend-setting bank rate at 4.5%, fearing that exports will "exert a slightly greater drag" on Canadian economic growth. Blame the U.S. slowdown, led, ironically, by tumbling house prices.
PRICES RISE
No fear here so far in 2007, reports CREA. First quarter results reveal the "highest level of any quarter on record." With the average national first quarter selling price of $310,510 -- a 10% boost over the first three months of 2006.
This was borne out in the latest RBC homeowner survey, which determined that an overwhelming 90% of Canadians polled rated a home purchase as a "good investment."
Good news, just in time for the traditionally hot spring real estate market.
