Canada: The Housing Market
October 30, 2009
A current article in the Scotia Capital gave a very genuine angle at the Canadian real estate market. They are wondering: Why is the Canadian real estate sector head and shoulders higher other global real estate markets? Is the potential more for a bullish or a bearish flow?
There are several factors that are helping the market in Canada. Although there was a big increase in listings at the start of the year, these went very fast. Slumps in developers’ margins on houses aided the stock of newly built homes lower. But the most thankful condition is the non-existing hidden stock of foreclosed houses. The by far the biggest problem in the US market is the hidden stock of foreclosed houses.
The main reason for the overall good health of the Canadian real estate sector is disputable, but most of the experts think it’s based on the supportive efforts of the last year. The main difference between the USA and Canada with regard to the tax incentive packages are in the USA they are time restrained.
Residents in Canada have seen their RRSP withdrawal limit elevated, home buyers’ and restoration tax credits as well. There are also tax motivations and rebates for energy and upgrading your house and that doesn’t even cover the local incentives. The Canadian housing market was in a good situation compared to the rest of the world, made even better by the forward thinking attitude of the Bank of Canada.
This goes to show the bullish or upward pattern of the housing market. There are a few potential market ‘landmines’ to stay away from. The condo outlet in Canada is a cause for worry Scotial Capital experts think. Thirteen per cent of housing construction is condominium builds. This market for some reason is not selling as well generating a build up of unsold condos. To stop the unabsorbed condominium levels rising experts believe that there could be growing pressure for prices to drop after seeing a report by the CMHC.
Real estate investors should continue to look at the Canadian housing market as a brilliant investment. The condo market is an area that investors need to observe carefully. Thoughts about the upward or downward current of the housing market comes down to the federal government. It would be too trusting to think that that the results of the housing motivation inducements will last forever. Shuffling of the future demand to the present over time can cause a severe jump in listings later. Taking awy the incentives in one deadly blow could have a catastrophic effect.
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