Ch, 12 Blog Canada's Housing Market is Cooling

http://www.financialpost.com/news/story.html?id=920010



Summary

The article is mainly about the prediction of house prices that is going back up next year, according to Canada Mortgage and Housing Corp (CMHC). The forecast showed that Canada's house prices have been dropping frequently where the largest housing markets were experiencing price decline for four months straight last year. The CMHC had a debate with the forecast of house prices recently whether the the price should go up or not. They expected the average price of a home sold from $305,707 to $306,500, however; next year it will increase to $306,700 ($200 difference). In 2007, there were 523,701 transactions for sales of homes. In addition, due to the rise in house prices the transactions in 2008 and 2009 were much lower.

Connection

The connections between the article and our textbook on Chapter 12 is the five-journal system. The companies who sells and records transactions for the sale of homes, will likely to discover a trend where an increase in price will lead to a decrease in profit. In the synoptic journal the account that is affected is the Sales Journals account where it will be decrease due to insufficient house prices.

Reflection

I personally think that the CMHC should not raise the value of houses for the upcoming years because it will strongly affect their earnings and profits. By Comparing the data between the previous years, I think people are starting to lose interests in houses because it is incredibly expensive. I think the CMHC should either lower or not change the price of houses at all because people will most likely not going to purchase houses, they'll rent instead.