According to the Economist, after inflation is taken into account, U.S. home prices have fallen by 18% over the past year. That’s worse than the 10.5% drop during 1932, the worst year of the Great Depression.
Here in Canada, we live in a different world. Here, home prices can keep going up forever, right?
Maybe not. The latest Scotia Economics report on real estate trends concludes that “After many false calls, there is now convincing evidence that Canada’s housing market has come off the boil.”
The report points out that we’ve actually already seen house prices fall in Canada—though you may have missed it. After inflation, the average resale home price in Canada actually went down by almost 1.5% first quarter 2008 over first quarter 2007.
Not many people are expecting that trend to continue for the year, but who knows? Not many people were predicting an 18% decline in U.S. home prices at their peak either.