How will the Canadian housing market fair with the U.S. Federal Reserve dropping the rate by another .25%?
Our Canadian economy has seen good growth over the past few years while our neighbours south of the border have had, to put it mildly - a hard go of it. An unpopular war sucking billions of dollars out of its economy, the sub prime fiasco, and now our best trading partner's dollar hovering at .94 to our $1.00 - is there light at the end of the tunnel. Are our housing prices going to bottom out, go through the proverbial roof, where's Greenspan when we need him!!
I recall a few years ago a buyer from Vermont called me to view a property in a pretty little community about one hours drive outside of St. John's, Newfoundland. The house was built in the 1800's, had a nice renovation completed, included all the furnishings, was situated five minutes from a pcturesque cove and was listed at $189,900 CDN. At the time, this little gem would have cost the interested buyer about $130,000 USD. The sale did not go together because the buyer's property in Vermont did not sell at that time. Thinking back three years later they would have had a nice return on their investment if the stars were aligned correctly.
So after reading Mike Jone's blog Loonie Rules! Canadian Buying Power Up 6 Percent for Tuscon Home! inviting Canadian buyers to purchase in Tucson Arizona, it got me to thinking that with the Feds dropping their rates yesterday to prop up the US real estate market, where is our market headed? We already know that products made in Canada sell cheaper in the US, like tires, why we don't know. We also know that items purchased in Canada that are made in the US are higher priced, books for example (taking the cost of shipping into consideration). So what will become of our housing market, will our homes appreciate or stagnate, will we become victims of the housing "bubble" the US is experiencing. I would have said confidentially "no, no, no" last year but now am really uncertain.
I know my buyers will ask the question. Anyone with a crystal ball?