Real Estate Markets in Canada are in a Better Shape in Comparison the USA.
June 15, 2010
Unknowingly, the housing market rebounded quicker than anyone expected. Scrutinizing at the 2009 figures we see that they started to jump up in the spring and they then saw a massive increase through the summer. When we analyze the winter months we observe an even larger increase with reports of over a 100% jump. Typical prices surpassed the pre-crash level of the fourth quarter 2009.
So why does the Canadian housing market do much better than the rest of the world? Let’s have a look at the basics of why. Most specialists believe the main reason can be attributed to extremely low interest rates, introduced by the Bank of Canada, which slashed rates down to a record low 0.25%. US rates were comparably low as well, but there are reasons why the low-rate policy assisted in Canada but not so much in the States:
The Canadian mortgage market was not as damaged with sub prime mortgages as the US market. Canada gave these subprime loans to between 5 and 10% of the population, unlike the US who’s subprime loan market was a gigantic 22%.
The World Economic Forum consistently state that the banks in Canada are are the solid in the World. The way the banks and other financial institutions dealt with the hard times is another reason why Canada avoided the credit crunch for the most part.
Our unemployment rate has increased, as it has in the US; but, the increase wasn’t as severe, and our economy has been slowly adding jobs again since last summer. Personal bankruptcies are lower due to the social system in Canada
I would say that the housing market in Canada is pretty much stable. It is so positive, in fact, that there are individuals in the background whispering of a new and more dangerous real estate bubble ahead. From my own thoughts of the real estate market I don’t believe this for a minute.
The Bank of Canada promised to keep the rates of interest stable until summer 2010. As this date arrives, most specialists say we will begin to see rates increase, and most of the Canadian banks have already started inching up mortgage rates. The First Time Home Buyers’ Tax Credit is going to finish soon, despite there is no official date it stops it can’t stay for ever. At last the number of houses entering the real estate market is gradually growing since the fall figures were published. As Jay Banks from Vancouver Lofts, adds: “Over the last few months, the real estate market has seen an growth of new listings on property agent’s books, which has balanced the situation.”
These things will without doubt cause the Canadian market to slow down in the second half of 2010, with moderating prices and levelled sales.
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