When compared to the US, the Canadian housing market suffered a slight setback as a result of the financial crunch in 2008. Large institution investors cashed in buying up thousands of distressed properties in the US. Some of them are cashing out and taking profit.
The U.S. housing market collapse and resulting field of distressed properties put millions of homes up for grabs and bargain prices, many of which were snapped up by institutional investors. New reports indicate that many of those investors are already ready to cash in on those buys in the form of securitizations and IPOs. Some real estate investment trusts are launching IPOs, while others are making smaller sales. Some large investors, however, are holding onto their properties and even collecting more. Analysts say the good news is that home prices are still appreciating in places where those investors are scaling back on purchases, which is a sign of a healthy market. Source: An except from National Real Estate Investor.
Canada is different
Such large scale purchases of distressed properties by institution investors are not likely to happen in Canada. The foreclosure process in Canada is different. Even if we have a crash in home prices, Canadian banks and CMHC will likely have a system in place to deal with the upside-down mortgages in Canada. Judging from the strong buying support for properties that were sold in recent months, buyers are rushing in to buy homes that were mere 5% lower than comparable homes. View homes for sale in Vancouver, Burnaby and Richmond.
How Canadian home prices compare to other countries?
When the increase in Canadian home prices from 1979 to 2013 (over 34 years) is compared to the US, UK and Australia, the gain in home prices in Canada was moderate compared to UK and Australia. While Canada recorded a gain of about 5.7 times, UK and Australia were gaining 7.5 and over 10 times respectively.
When compared to average house hold income, rental yield, price per sq meter, etc Canada is within the middle pack of countries, showing moderate gains in values. The interactive map here shows the gains in values for various countries.