Canada’s real estate market to cool, not crash

The banks have two pieces of good news for Canadian homeowners — real estate prices are expected to cool, not crash, and home ownership is becoming slightly more affordable.

Canada’s housing market is losing some of its “exuberance,” but fears of a bubble are over inflated, unless there is the unlikely situation where jobless rates suddenly soar along with interest rates, Scotiabank Senior Economist and Real Estate Specialist Adrienne Warren told a Toronto audience Wednesday.

In fact, a softening of house prices in the final half of 2011, along with income gains, helped offset record high debt levels, making home ownership slightly more affordable even in the notoriously expensive Vancouver market, according to new research from the Royal Bank.

“The improvement in affordability was a welcome reprieve for Ontario homebuyers as it helped reverse some of the notable deterioration that gripped the province in the first half of last year,” said RBC senior economist Robert Hogue inImage a release Wednesday.