The thing to remember about housing booms is that they seldom end well.
Everyone wants the landing to be soft. Often it's not. Starts fall, or go flat. Employment stagnates. And the result is a drag on economic growth that can last for years.
That's why there was considerable relief Tuesday with news that housing starts for March rose 0.4 per cent to an annualized rate of 184,000. Economists were bracing for a drop to 175,000. February starts were also revised up to 183,000.
Falling starts in Ontario and Quebec were overshadowed by stronger activity in rural areas of British Columbia, the Prairies and Atlantic Canada.
The last severe housing slump in Canada – in the early 1990s – certainly wasn't soft.
"It tends be bumpy," acknowledged BMO Nesbitt Burns senior economist Robert Kavcic.
"Typically it's associated with a recession. If you look at the really hard landing back in the early 1990s in Toronto, that came with a steep recession. The short correction 2008-09, that came with a recession too."
The narrative of many economists and government policy makers is that this time is different.
"The difference this time is that it's not going to be driven by a recession. It's going to be driven by the exhaustion of pent-up demand and stricter mortgage rules," Mr. Kavcic explained.
Considerable pain still lies ahead. There is still a lot of new supply coming on stream, particularly Toronto-area condos, and that will continue to depress the market.
Mr. Kavcic expects home prices to "flat-line" - possibly for years - and housing starts to drift lower for a year or more.
The bottom line is that housing has become a drag on growth.
Looking at March in isolation is a bit deceptive. For the entire first quarter, annualized housing starts are down 41.5 per cent – the worst drop since early 2009, according to National Bank economist Krishen Rangasamy. Single-family starts are down 18 per cent, while multi-units, such as condos, plummeted 62 per cent.
"We expect residential constriction to soften further in coming months," Mr. Rangasamy said.