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Simeon Mitropolitski is a Canadian analyst, of Bulgarian origin, and a former syndicated columnist with the Bulgarian News Agency (BTA). He is the author of several hundred articles dealing with hot political and economic topics, both national and international.

He was part of the first group of Bulgarian intellectuals and students that began the opposition movement that finally put an end to the communist regime in this country in 1989, and in 1996-1997 participated in international observation teams during the elections in several Balkan countries - Romania, Albania and Bulgaria.

In 2002 Simeon and his family moved from Bulgaria to Canada where they live now in Montreal, province of Quebec. Simeon is a Master of Political Science from McGill University and a B.A. of Political Science and History.

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If one sentence can summarize the situation on the residential real estate market in Canada right now, it's small fluctuations up and down in different provinces without any significant direct influence from foreign markets. With possible exception of Quebec, which actually moves in a direction completely opposite to what hard economic data might suggest, all other major markets in Canada show signs of logical ups and downs.

With the recent downturn in some U.S. regions, there were many talks whether this trend would affect foreign markets, e.g. Western Europe and Canada. Given the similarities on the real estate market structure in many countries, the conventional wisdom suggests that a major trend in one country must be matched by a parallel trend in other countries; if this isn't the case, than the move in this first country should find some alternative explanation(s).

Imagine that two countries, X and Y, have everything similar but only one feature, e.g. the main interest rate, which is much higher in X than Y. As a result, the country X shows a market slowdown, and the country Y shows strong performances. Our initial hypothesis will be that interest rates affect negatively the real estate market, the higher they are, the slower the market is. Now let's suppose that the country Y for whatever reason decides to increase its own rates, thus matching the rates of the country X. If within a reasonable period there is no market slowdown in Y comparable to the slowdown in X, then the initial hypothesis must be rejected, or at least revised. It's now not the rates alone that affect the market performance, but rates in combination with other factors that were eliminated as insignificant during the first test.

What we see now in Canada is in fact a refutation of two initial hypotheses. First, it seems (so far) not true that the U.S. residential market can directly affect foreign markets, no matter how the financial systems are interdependently linked, this link being one of the elements of the globalization. Second, higher interest rates don't automatically lead to real estate slowdown; the possible reason why this might be so, is perhaps the interference of some alternative factors, such as general economic activity and demographic developments.

As a country of many weathers, Canada usually doesn't move uniformly when it comes to real estate market performances. Nevertheless, certain trends in different areas can be discerned. They all show, at least for now, that neither the U.S. residential market is a major factor, nor interest rates alone affect the market, when other factors can offset them. The West (Alberta and British Columbia) is moving up, which isn't surprising given the general positive economic and demographic trends. There are just more people spending more money, and therefore more construction activity. Northern Alberta also is the place with the highest residential rents, surpassing much larger urban centers such as Toronto, Vancouver, and Calgary. Ontario, on the other hand, is in a period of small economic stagnation, which also has some very logical explanation given the global demand for its products.

The only temporary anomaly in Canada is Quebec, where the construction activity seems again on the move up, without any significant reason for that. The economy seems to be decelerating; the demographic situation isn't rosy, the property prices and the rents are at standstill. Why so much investment in new residential starts? This is a question that defies easy answers. It may be a temporary phenomenon before the market makes certain corrections. Or maybe the structure of the population, with so many early baby-boomers already on the market for retirement residences is the missing factor that makes all the difference.

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