While it's tempting to think of a "housing correction" as a continent-wide phenomenon, National Bank Financial says the Canadian and U.S. markets couldn't be more different.
"The two have absolutely nothing in common," senior economist Marc Pinsonneault wrote in an economic update Monday. "In Canada, the correction got under way much later and lasted nowhere as long."
Mr. Pinsonneault said "prudent lending practices" in Canada prevented the housing market from falling as hard as its American counterpart, and pointed out that Canada's crisis was a side-effect of its recession rather than its cause.
Here are four ways the markets have differed:
Duration of slowdown
The Canadian market began to slide in Octobe,r 2008, while the American slump has lasted 2 1/2 years.
"People wishing to sell their homes either cut their asking price or quite simply took their property off the market," he said of the Canadian market. "Lower interest rates, lower home prices and renewed consumer confidence led to a quick recovery in sales, so much so that as early as last May, these had surpassed pre-recession levels.
The American market still faces challenges - the number of sales has to increase 70 per cent "to return to levels in line with a normal situation."
Price declines
According to Teranet, Canadian home prices fell 8.9 per cent from their August, 2008, highs to their recessionary lows eight months later. In the U.S., the S&P/Case Shiller index shows prices slid 33 per cent in 33 months.
"In Canada, in three of the six metropolitan areas covered ... namely, Halifax, Montreal and Ottawa, the correction was rather ephemeral, lasting from three to six months," he said. "In addition, it proved pretty light, with prices retreating less than 5 per cent. Moreover, since the market trough, prices in these three areas have already made up the ground lost during the correction."
While prices in Vancouver and Calgary took harder hits, they still did better than the worst U.S. markets.
"Prices there fell in a measure comparable to that registered in the U.S. cities least affected, that is, Denver, Dallas and Charlotte," he said. "The market began recovering only recently and, therefore, a return to pre-correction price levels is not imminent.
Delinquency rates
Canadian banks have seen delinquency rates climb to 0.4 per cent, compared to the 0.65 per cent high reached in 1992. The number is far greater in the U.S., at 3.67 per cent.
"Before the market's collapse, the maximum ever observed had been a little more than 1 per cent back in early 1986," he said.
Consumer spending
When home prices are under pressure, consumers tend to reel in the spending.
"According to Statistics Canada, from the end of Q3 2008 to mid-2009, the value of household real estate wealth sagged only 1.1 per cent," he said. "The impact of this impoverishment on consumer spending has been negligible."
In the U.S., the value of household real estate wealth dropped 18.2 per cent. The Federal Reserve estimates that for each dollar lost in housing wealth, consumer spending pulls back up to 15 cents.
"Based on these figures, the loss in household real estate wealth in the United States has brought about a contraction in consumer spending of 5.5%. The macroeconomic impact here is blatantly clear."