Are real estate prices dropping 44% in Ottawa this decade?
An article in the Ottawa Citizen has a scandalous headline: “Lost Decade ahead for Canadian Housing…economic shock could knock housing prices down by 44%“. This headline is likely to strike fear in the hearts of homeowners across the country. In this week we have had two differing reports on the direction that the Canadian real estate market is heading. The article combines elements from both reports and then sensationalizes the headline.
Report #1
The TD bank released a special report outlining findings of a new research paper. The report stated that since 1980, housing prices in Canada have increased by an average of 5.4 per cent per year. They then predict that there may be a slight decrease in house prices for a year or two and then we are to expect an increase of 3.5 per cent annually from 2015 until 2025.
Report #2
The second report is a speculative one from Moody’s Investor Service. This article discusses what could happen to the housing market if there was an economic disaster similar to the subprime mortgage fiasco in the United States. In fact the article states that this is speculation of what could happen “in the event of a severe economic shock.” In the same article, they describe how Moody’s also stated that Canada is not as vulnerable as other countries when it comes to experiencing a severe economic shock.
So are house prices going to drop by 44% in Ottawa?
In our opinion, the Citizen article has combined the two articles and sensationalized the headline. Kent Browne, Broker of Record and owner of Royal Lepage Team Realty as well as owner of Royal Lepage Gale Real Estate in Ottawa had this to say about the Ottawa Citizen Article:
I take great issue with the sensationalizing of the content, and the extremely misleading headline…a reader is given the impression that housing prices are going to fall, wherein reality the findings state that the rate of increase in prices will fall from 5.4%-3.5%….instead of promoting the Ottawa economy, re-confirming the viability of our market, stating the facts of our current market, and having comments from local professionals…and praising the fact that our very solid and reliable Ottawa market will continue to grow at 3.5%,…the sensational headline strikes fear into the heart of every homeowner.
We agree. The real estate market in Ottawa is solid. While we may not see the 5.4% annual growth that we have been used to, a year to year growth of 3.5% is still a sign of a viable and healthy market.
(Image courtesy of flickr.)
