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Lululemon Athletica founder Chip Wilson's mansion is pictured in Vancouver, B.C., in April, 2015.

Darryl Dyck

Spare a thought today for poor Chip Wilson. The Lululemon founder’s waterfront mansion lost nearly $6-million in value last year. It’s now worth just a little over $73-million, according to the latest B.C. property assessment figures.

But it’s not just the mega-rich witnessing a drop in the estimated worth of their homes. It’s a phenomenon occurring in the detached home market throughout Greater Vancouver. It’s happening in Toronto, too, where sales in 2018 fell off a cliff.

It’s not even just Canada. Some of the most expensive markets in the world, including Hong Kong and London, have seen recent declines. Singapore is in the grips of a slowdown as well; Australia, too. The great global housing slump is on, and how deep and devastating it becomes remains to be seen – but the concern is very real.

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The International Monetary Fund recently issued a warning that if the valuation descent we’re witnessing deepens and spreads, it could produce “financial and macroeconomic instability,” according to a report by Bloomberg News.

For some, especially those who bought at the height of the market, it is deeply disconcerting news. They have no choice but to take the long view; prices will rebound eventually, as they always do, and their home will one day be worth much more than what they paid for it.

But the price tumble is undoubtedly a welcome sight for those who couldn’t abide the wretched, unprecedented cost appreciation of the past few years, one that robbed many of the middle-class dream of home ownership.

The reasons behind the declines we’re seeing vary from market to market. However, there are also some common threads. The fragility of the global economy is one. It has scared off investors. So has looming trade wars. And buyers, primarily from China, have also dried up, thanks to measures brought in by national and subnational governments aimed at discouraging their involvement in offshore markets. The Chinese government has also cracked down on the torrent of capital that was fleeing the country.

Here in Canada, there has also been another factor: New mortgage stress tests have made it more difficult for potential home buyers to get the funds necessary for a down payment. While it was a bitter pill to swallow for many, it was the right move.

The fact is, cheap money has been too easy to get the past several years. And Canadians have stuffed themselves on it. According to a recent story in Maclean’s magazine, we now owe $2.16-trillion in mortgage, credit card and other consumer debt – all while interest rates start to inch up (although the Bank of Canada this week signalled a reprieve on that front). The new mortgage rules have chopped the amount Canadians can borrow by 20 per cent. And that’s had a big impact on the real estate market.

So, is the house price drop a harbinger of something potentially calamitous? Is it all bad news? Not from my perspective.

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The fact is, home prices in markets such as Toronto, and especially Vancouver, became alienated from local incomes long ago. The disparity has become so great as to be laughable. Any notion that the price slide we are seeing has suddenly made homes in these markets affordable is a joke.

According to the Greater Vancouver real estate board, the average price for detached houses sold in the region dipped to more than $1.6-million in December, down nearly 5 per cent from the same month a year earlier. It’s a start. But barring a complete and unexpected crash, we’re unlikely to ever see prices in places such as Vancouver that aren’t abhorrently expensive. That ship has sailed.

It will be interesting to see what the current slowdown will do to various economies. In British Columbia, for instance, real estate-related activities – including construction – account for roughly a quarter of the total GDP. The province has come to count on tax revenue from home sales to the tune of hundreds of millions of dollars annually.

Will the government suddenly ease off on the measures it brought in to cool things down?

I hope not. What we’re seeing isn’t a bad thing; it was necessary, and perhaps inevitable. Whether it’s a minor correction or something more substantial and potentially earth-shaking will likely be determined over the next year.

Who knows how much more reasonable the cost of Chip Wilson’s home might get.

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