One thought on “Canadian Housing Markets Finally Facing Reality

  1. The weak real GDP numbers in Canada are impacted currently by the slowing state of the Canadian housing market (I’m researching this right now to find out just how much housing has been and is currently contributing to real GDP). If the Canadian housing situation gets worse in years to come, similar to the housing decline in the US, politicians will not be able to use residential housing as a tool to artificially pump the real GDP numbers.

    I know the Bank of Canada’s economic forecast models are quite sophisticated and complex, but whoever is running the real GDP forecast model/models lately has been way off.

    In the recent Jan 2013 Bank of Canada Monetary Policy Report (Jan 2013), the BOC has lowered the expected year over year real GDP forecast for 2012 to 1.9%, down from 2.2% in the Oct 2012 forecast (anyone with a pulse should have known that 2.2% number for 2012 back in October was nuts). And for 2013 they have lowered the real GDP forecast to 2.0%, down from 2.3% back in the October forecast. At least for 2012, they have been consistently off in their growth forecasts….not even close.

    Another two or three months of weak (barely above 1% on most important growth metrics in the last couple of months) economic performance data in Canada like we observed in Q4 2012, and we can all forget the current 2.0% real GDP forecast for 2013 (unless some miracle economic growth event occurs in the US to improve Canada’s exports).

    BOC Real GDP Forecast (Jan 2013)

    Hope this helps.

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