David Berman has a new coloumn in the Post called “Ahead of the Bell”. In it he discusses market matters that haven’t yet happened. Sunday he wrote about the smugness of the current bull market in stocks; today he wrote about weakness in Canadian real estate prices (sorry, I can’t find the link right now for some reason).
He compares the US drop in prices with Canada and comments that the same thing will happen here. While Berman is pessimistic, he also quotes BMO Capital Market’s senior economist, Bert Melek, who points out that the US has a fundamentally different market. The US had an upswing in interest rates from 1% in 2003 to 5.25% today, a volatile ride that Canadians haven’t experienced. Additionally, lending practices in the US were much looser. Berman counters by citing a BCA Research report indicating that Canadian real estate is currently 28% over-valued based on comparisons with gross domestic product and competing assets.
In another real estate related story Mario Toneguzzi reports that Zaio Corporation, a Calgary based company operating in the US, is expanding to Canada. Zaio builds databases of photos and property info and then sells it, on the basis of geographic zones, to appraisers. The idea is that appraisers will have a faster turn around so that the mortgage process can be sped up.