Actually, the last recession within 9 months (by the end of March 2009 prices were down almost 15%.
Your point about the credit crisis never being over I think is totally a propos. I recall saying exactly this throughout 2009 and 2010. As in the Economist article KA1 refers to, the psyche of the American consumer has been damaged. For that matter, so has the psyche of the consumers in Europe and elsewhere. The Americans started to save. Great but this does not bode well for the economy in the short term. Long term, I have maintained (as have others) that deleveraging will have to occur (like anyone who has maxed out his credit cards, you can't keep adding more charges to it). So the painful bringing of household debt back into sustainable levels, i.e. austerity has to hit the World's largest economy ( and therefore side swipe the Canadian one). Add Europe's economy slowing, China already with inflation and a low peg Yuan not being able to sell, and the whole World could feel a massive shock. China, India, Brazil etc. lead us out somewhat of the last recession but this was also facilitated by massive easing by governments around the World. Now things are not better and most governments are far worse off than they were at the start of QE1. So, not to be doom and gloom, but just being logical, how can someone logically explain to me that real estate can continue to buck the obvious need to meet fundamentals at some point. I appreciate that governments may well "mess with the natural market" but in doing so, they simply postpone the eventual reality of the correction.
Fairly accurate analysis of the current situation. Canadian economy, including r/e sector, may be relatively strong, but it is not immune to the rest of the world. Too much bad news all around us ... Right now I'm much more concerned with TSX than r/e, but if this continues, leveraged r/e will be next.
KA1, it will be interesting to see what happens to August average prices. Hopefully not another 3.6% decline as that would be a real concern.