Housing prices have now crumbled 6.3% from their May 2010 high. That is over 25% annualized loss, and we are only in the summer! We might be seeing 30% loss in the year over year by next May
The skin of the housing bubble is about to burst. It's not higher interest rates or even doubtful employment. It is simply the return to a normal level of home prices. Housing for a brief time, the last two decades, was somehow percieved as an investment, not a basic commodity like shoes, food, heat. The very idea that shelter is also an investment defies logic, but that is what occured. Now, like the laws of nature, the laws of economics also must return.
So my prediction for housing in Toronto - a 40-50% drop and Vancouver a 60% drop. This drop is to a stable price. The prices could actually, and will likely move down farther than that as a standard reaction. These price drops will overshoot, just as the recent twenty year bubble overshot.
