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Division
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Investment and Export
PO Box 7970
Madison, WI 53707-7970
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Vol.
7 #6, July 2008
Differences between Canadian and U.S. Housing Markets
Canada’s Toronto-Dominion (TD) Bank reported at the end
of June that the long awaited end of the Canadian housing boom has
finally occurred, reflecting more moderate demand and increased supply
of properties for sale. While nothing like the slump that has hit
the U.S. market because of the sub-prime mortgage crisis, most of
Canada’s major housing markets have moved out of seller’s
territory to more balanced markets.
The growth in average home prices in Canada is expected to slow sharply
from the 11 percent posted in 2007 to a low single digit pace. TD
economists forecast a modest national average price growth rate of 2
percent this year and 3.5 percent next year. Sales are
significantly lower than in the banner year that was 2007, but they are
returning to 2004-06 levels, held up by solid economic and financial
fundamentals. Saskatchewan and Manitoba are bucking the national
trend this year with double-digit growth, but are expected to cool next
year. Non-residential construction is still strong in Canada and
the federal government has been proposing a number of infrastructure
projects.
Adjustable-rate mortgages (ARMs) were never as popular in Canada as in
the United States. New Canadian home owners are not experiencing the
spike in mortgage payments leading to increased delinquencies and
foreclosures that precipitated the housing market decline in this
country. Canadian consumers are not as leveraged through their
home equity as are U.S. consumers. The full report from TD is
available at http://www.td.com/economics/special/pg0608_housing.pdf.
To learn about other ways that the Canadian market is different from
the domestic U.S. market, contact the Wisconsin Department of
Commerce’s Canadian Specialist, Mr. Stanley Pfrang, stanley.pfrang@wisconsin.gov, (608) 267-0639.
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