Canadian Home Prices to Drop

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By Elli Davis, May 7, 2010

Photo by Penguincakes

The prices of Canadian homes are going to drop slightly in 2011. This is what the Toronto-Dominion Bank forecasted on Wednesday. The reason, according to the bank, is that the increasing interest rates (the economists of the bank are expecting the Central Bank to raise them in June), are going to reduce the ability of the people to purchase property.

Even though Toronto Dominion had earlier predicted a 1.6 percent rise in property prices in 2011, it has now changed its mind and actually expects them to drop by 2.7 percent. The listings have been stronger than predicted and thus the market balance should be a little easier in 2011. In 7 out of the 10 provinces, it is likely there is going to be a drop in property prices. Together with British Columbia, the Bank expects Ontario to have the most significant fall. A 3 percent decline for our province and a 3.4 percent drop is forecasted for British Columbia.

Who knows what will come next. I actually like the changing reports; it shows the constantly changing situation of the housing market. However, it is therefore very tough to accurately predict anything. What should we believe in then?