Real Estate Markets in Canada are Stronger than in the USA.
June 15, 2010
Luckily for Canada the real estate market did a u-turn out of the recession faster than anyone thought. In the spring of 2009, Canada saw the about face of the real estate market, we observed sales figures continuing to climb in the following months. When we look at the winter months we see an even greater increase with reports of over a 100% jump. At the same time the real estate prices even overtook the pre-crash figures.
Scrutinizing the Canadian market against the rest of the world, observes Canada doing much better and there are several possibilities why. The first reason is possibly due to the extremely low interest rates set by the Bank of Canada at 0.25%. US rates were comparably low as well, but there are reasons why the low-rate scheme was supportive in Canada but not so much in the States:
The Canadian mortgage market was not as damaged with sub prime mortgages as seen with the US market. When looking at the important years of the recession, 2006-8, we see that the US lending market had 22% of loans in this category, compared to a maximum of 10% in Canada.
The World Economic Forum frequently report that the banks in Canada are are the soundest in the World. The way the banks and other financial institutions dealt with the depression is another reason why Canada averted the credit crunch for the most part.
Our unemployment rate has risen, as it has in the US; still, the increase wasn’t as severe, and our economy has been slowly adding jobs again since last summer. In addition, Canada’s social system helped to lessen personal bankruptcies.
In conclusion the Canadian real estate market is certainly very solid. Unluckily with news this good a few people are starting to mutter about the prospect of bad news, in the not so distant future, for the housing market. From my own scrutiny of the real estate market I don’t accept this for a minute.
The interest rates are looking favourable, with a promise from the Bank of Canada to keep the rates stable for another few months. Rates will rise as summer arrives and we have already seen some mortgage rates increasing a little. We are also coming closer to the removal of the First-Time Home Buyers’ Tax Credit, which is going to have an impact on the real estate market. Since the autumn 2009 we have seen a failure of new listings on the real estate market this is no longer the issue. Jay Banks of Vancouver Lofts notes: “Over the last few months, the real estate market has seen an jump of new listings on property agent’s books, which has steadied the situation.”
Putting all these factors together, I firmly think in the second half of this year, we will see property price starting to level off and the market begin slowing down.
No related posts.
Related posts brought to you by Yet Another Related Posts Plugin.
Comments
Got something to say?