A lot of my net worth is tied up in my house, but its value has slipped sharply. Is this going to reverse when the recession is over?
Some analysts think house prices were overvalued in the years leading up to the current slump, and will therefore take quite a while to come back.
In a report this week, Toronto-Dominion Bank economists say that during the stretch from 2004 to 2008, the price of houses exceeded their true value by about 9 per cent.
The high prices - driven by speculation - caused so much building that overcapacity will keep prices down for at least three years.
Even when the recession is over, they said, prices will rebound slowly and there won't be a lot of new building.
Are there particular problem areas?
TD says Calgary and Edmonton have built up inventories of unsold single family homes, while Montreal has too many condos and apartments.
Toronto and Vancouver could have too many multiple units too, when the condos under construction are finished.
What about the housing start numbers that were just released? They seem pretty good.
Many economists seemed to think yesterday's numbers, which showed a big 14-per-cent jump in housing starts in March, were an anomaly. They say any increase in construction will likely exacerbate a glut of homes on the market in the coming months and years.
