Turner warns that prices may begin to fall
John Morrissy
Province
OTTAWA — With the subprime contagion spreading around the world, Canadians who hoped their homes would be immune from the carnage are wrong.
The disease is here and coming soon to your neighbourhood, says financial author and member of parliament Garth Turner.
The effects of the U.S.-induced mortgage crisis were everywhere yesterday — in the crumbling U.S. dollar, in Carlyle Capital’s $16-billion mortgage writedown in Amsterdam, in mounting housing foreclosures in the U.S. and in crashing stock markets in Europe and Asia.
“Absolutely, without a doubt, that contagion is spreading to the Canadian real-estate market,” said Turner, the author of a new book on the subject titled Greater Fool, the Troubled Future of Real Estate.
Within 18 to 24 months, Canadian homeowners could see the value of their homes fall by 10 to 15 per cent, Turner warned, saying early signs of a deteriorating real-estate market are “all around us.”
Sales of existing homes fell off the cliff in January, tumbling six per cent in January alone or 72 per cent on an annualized basis.
At the same, time the number of listings nationwide shot up 11 per cent, Turner said, quoting the Canadian Real Estate Association.
And prices are starting to fall, in such once hot markets as Calgary and Edmonton.
Turner’s advice to homebuyers is to avoid 40-year mortgages and for existing homeowners to stop basing their financial decisions on the notion that real-estate prices will continually climb.
” I think people should get used to two or three or four years of a flatlining real-estate market, at best,” Turner said.
