Many economists are predicting a further decline in house prices for 2009. A recent Globe and Mail article quoted CIBC Economist Benjamin Tal, as expecting the average house price to fall by another 10 per cent over the next 12 months, and to remain relatively stable after that.
I think it is safe to assume that housing prices will decline (too much supply, job losses, tougher mortgage rules). However, when housing prices start to decline, many very interesting things happen. First of all sales immediately decrease sharply. This is because it often takes consumers time to realize that they cannot sell their home for a high price. Most people avoid reducing their price and decide to wait. The homes that do sell are the ones with the best price. Also when prices start to decline, anyone who purchased a home in the last two years begins to realize that they cannot sell their home for a profit. Anyone who chooses to sell now has to keep this in mind.