
(click on graph to enlarge)
So, prices are continuing to go up across Canada. The question is, should we be happy or concerned. Well if you are selling right now, be happy. If you buying right now, I suggest you should be worried. We are likely at the end of the cycle and unless your are planning on staying where you are for 10 years, there may be the possibility that you will lose money.
Furthermore, there is no compensation in these numbers for the energy prices that everyone will be paying in the near future. What will be the impacts? Likely lower prices compared to the inflation factor. Your house may go up, but not in pace with the price of gasoline and all good dependent on gasoline. That will include all goods delivered over large distances as well as goods that have energy intensive production.
So, where are we now does not mean a lot for 10 years from now. So where are we?
The two main series on house prices in Canada are: (1) Statistics Canada's measure for new homes based on contractors' selling prices; and (2) the Canadian Real Estate Association's (CREA) figures on average existing home sales prices, for homes sold through its Multiple Listing Service®. The Canada-wide index of new home prices increased 6.5% in January 2008 versus January 2007. For the same time period, existing home prices, as estimated by CREA, were up 9.6%.
The results may give you optimism to buy now, but I don't believe this can be sustained. Remember, the real winners buy low and sell high.
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