I´ve been up in Canada over the past week, and it´s obvious Americans could learn a few things from our neighbors to the north. Canada´s economy appears to be (really) stabilizing after a comparatively mild downturn and commercial real estate markets should follow suit-value declines have been in the 10-20% range in contrast to losses in the U.S. headed on average well above 40%. Housing markets in Canada suffered mild buffeting, but prices in prime neighborhoods have more than held their own, and appear to be increasing again. Foreclosures, defaults, and dislocation aren´t part of the local landscape anywhere from coast to coast.

Vancouver ranks as the top North American commercial property market after Washington D.C. on the Emerging Trends survey. Toronto suffers from increasing office vacancy-a result of new development in the downtown core. But deep-pocket institutional owners are well positioned to ride out any market softness. This global gateway has also grown into North America´s largest condo market, as more people look to settle in and around its attractive urban core. Hot growth Calgary suffers from overbuilding and hopes natural gas prices ratchet up to bail it out. Elsewhere the real estate scene shows few signs of any distress. On the property sector front, the U.S. automaker morass drags down the Southern Ontario industrial belt and hotels suffer from markedly reduced business and tourist travel from the U.S.

In general, Canadian real estate investors appear buoyant next to depressed U.S. counterparts. "It´s really a tale of two cities or shall we say countries," a major Toronto developer told me. "We´re sleeping much better at night." So what´s put Canada in a better position? Abundant natural resources (oil, gas, water) certainly help. But Canada and its citizens have also been much more fiscally conservative and responsible. The country paid down its debts after a severe early 1990s recession through a combination of spending cuts and higher taxes. Banks and financial institutions are highly regulated-capital reserve requirements and other mandates kept lenders and investors out of exotic mortgages, overleveraging situations, and hair brained securitization structures. Homebuyers typically must put down at least 30% equity to get mortgages. And consumers never got out of control either-people live more within their means without resorting as much to plastic.