How will a US slowdown effect Vancouver?

There are a couple of articles in today's Globe and Mail that are interesting.. The first is about a report from National Bank Financial that says US house prices could drop another 10%. This report disagrees with the National Realtors Associations chief economist David Lereahs claims that "This is the price correction we've been expecting – with sales stabilizing, we should go back to positive price growth early next year".

"Stéfane Marion, an economist at National Bank, disagrees with the NAR's statement that the faltering U.S. housing market has hit a trough and prices will start climbing again. "In our opinion, this forecast is way too optimistic."

"...rising interest rates, higher house prices and surging costs for heating homes have triggered a severe slowdown. In recent weeks, the housing correction has become the dominant topic of conversation, fuelling talk about a possible U.S. recession."

The second article examines what impact a U.S. recession would have on Canada:

"Canada sits ominously at the top of a list compiled by Merrill Lynch economists of countries that are most dangerously exposed to the slowing U.S. economy. After Venezuela, this country leads the world as most dependent on the U.S. economy for its well-being. And the United States, as becomes more evident with every new economic report, is in trouble.

Over at HSBC PLC, economists have gone through a similar list-making exercise, and they, too, found that “Canada is at the top of the tree” in terms of exposure to the weakening U.S. economy, surpassing Mexico and Latin America.

Merrill Lynch believes the rest of the world has enough momentum to pick up some of the slack left behind by the United States, while HSBC believes the U.S. will drag down most of the world with it. But they agree that Canada — with its open economy, its proximity to the U.S., and its dependence on trade — is more vulnerable than pretty well any other country to a U.S.-led global slowdown."

It's not all gloom and doom though - both reports suggest that even if the US economy tanks the Canadian economy may be able to get through with just a few "bumps and bruises".

"..consumer demand and business investment are expected to remain strong, fuelling the Canadian economy from the inside, instead of relying on the global economy for strength.

The U.S. slowdown could change that momentum, but it will take years to slow down domestic demand, said Merrill Lynch's chief economist in Canada, David Wolf."

But what impact would this scenario have on the Vancouver housing market? How much are we counting on property values to be driven by future demand from outside Vancouver?