According to a lot of analysis when the Canadian housing boom was at a peak, people were so anxious to get into the market that any fall in prices couldn't last long.

I remember Carol Off at CBC Radio's As It Happens grilling me about that in an interview almost exactly four years ago, after I'd written a somewhat gloomy column on the future of Canadian real estate.

My contention was that just as oil prices had declined in 2014 contrary to most industry expectations, we should realize that the housing boom could also come to screeching halt, even while experts with interests in the real estate business continued to be reassuring.

House-hungry buyers

Off's questioning echoed a widespread view in the market at the time. Buyers, young people especially, were eager to get into the market, but high prices prevented them.

The implication was that with not enough homes to go around, every time prices fell, house-hungry buyers would step in, preventing a further slide in value.

According to a simple supply-and-demand point of view, the analysis seemed reasonable.

While the latest real estate data showed average house prices down in Canada as a whole, Montreal was one of the places that bucked the trend. (Don Pittis/CBC)

But in the real world, markets are seldom so simple. And while no one ever knows for sure what markets will do next, the last three months of data from the Canadian Real Estate Association have not borne out that simple analysis.

With the notable exception of some places, including Quebec, the prices and sales of resale homes are down. And the CREA is predicting that for the whole year — December numbers won't be compiled till the middle of January — that will continue.

"National home sales are projected to post a double-digit decline in 2018, falling to the lowest level in five years despite supportive population and job growth," said the association's latest release yesterday. Nationally, sales are expected to be down 11 per cent and the average price of a house down about four per cent from last year.

More than a blip

Of course, in a complicated and diverse market such as real estate, averages don't tell the whole story.

In more than half of Canadian provinces prices are still rising. And the sharp 2.6 per cent decline in Ontario home prices includes a fall in sales at the highest end of the property market, especially during the traditional spring rush. There is a statistical quirk as well since 2017 spring prices were unusually strong.

That said, for buyers of Canadian homes, whether foreign or domestic, the turn in the property market will be something of a wake-up call. Three months in a row of declines likely signal something more than a blip.

On Monday U.S. President Donald Trump once again sniped at his chief central banker, Jerome Powell, but another rate hike is still expected Wednesday, making a rise of a full percentage point for the year. (Carlos Barria/Reuters)

"In 2019, home sales activity and prices are expected to be held in check by recent policy changes from different levels of government, in addition to additional interest rate increases," said the CREA in its release.

Despite sniping from U.S. President Donald Trump, the man who appointed him, Federal Reserve chair Jerome Powell is still expected to raise rates tomorrow for an increase for the year of a full percentage point. Whether the Bank of Canada's Stephen Poloz follows suit, a U.S. rate rise will contribute to a global trend toward higher borrowing costs.

More that one paragraph in this week's real estate association report point a finger at new federal and provincial rules intended to slow the market as part of the reason house prices have gone off the boil. Those include British Columbia's foreign buyers' tax and the federally mandated stress test that requires borrowers to prove they can handle future hikes in interest rates.

It is incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike. Take the Victory! —@realDonaldTrump

Despite all that, those industry experts insist house prices will rebound by 1.7 per cent next year. Just as we saw in the oil sector in early 2014, the people doing the predicting are so invested in rising real estate prices it is easy to doubt their public optimism.

Property markets everywhere go through cycles that can last a decade, usually overshooting on the way up and on the way down. Foreign buyers hoping to make a quick buck are right to be wary.

Drop like a stone?

There are still plenty of reasons to think Canadian house prices will not drop like a stone.

A continuing shortage of skilled labour as boomers retire means wages are likely to stay strong, giving people the wherewithal to handle a mortgage. Even the Federal Reserve's Powell has admitted interest rates may not go as high as he previously predicted.

As the CREA itself suggests, while boomers may be retiring they are not dying, and Canada's need for housing remains strong.

Also, as several recent studies have shown, high real estate costs do not destroy the career advantages of living in prosperous cities, and whatever the price, people need somewhere to live.

And finally those stress tests so many in the real estate business did not like may actually come to the rescue. As well as preventing imprudent home buyers from getting themselves in trouble leading to a spate of defaults as rates rise, stress test have had another positive effect.

Young buyers forced down the house price ladder have been building up equity rather than paying out every penny in interest rates.

With rising incomes, growing families and an increasing equity nest egg, maybe they really will be there to step in as prices fall and prevent them from falling further.

Follow Don @don_pittis