Property Markets in Canada are Healthier Compared to the USA.
August 16, 2010
Fortunately for Canada the housing market did a u-turn out of the recession sooner than anyone thought. Studying at the 2009 figures we see that they started to increase in the spring and they then saw a big increase through the summer. When we look at the winter months we notice an even greater increase with reports of over a 100% jump. Not only did the figures spring back but the average price exceeded the pre-crash figures.
Comparing the Canadian market against the rest of the world, looks like Canada doing much better and there are several points why. Most experts state the main reason can be referenced to extremely low interest rates, introduced by the Bank of Canada, which slashed rates down to a record low 0.25%. This low rate benefited the Canadian housing market and even though the US endeavoured to do the same thing, they didn’t see the same results:
High risk loans for mortgages was common in the US unlikeCanada. Canada gave these subprime deals to between 5 and 10% of the borrowers, unlike the US who’s subprime loan market was a gigantic 22%.
The World Economic Forum constantly report that the banks in Canada are are the most secure in the World. This institutional stand helped to deflect the coming credit crunch.
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. Personal bankruptcies are lower mainly due the social setup in Canada
To sum up, the Canadian housing market is on a firm footing. It is so good, in fact, that there are individuals in the background whispering of a new and more dangerous housing bubble ahead. I don’t believe this is the case, for a number reasons.
Interest rates are being kept steady until at the summer, according to the Bank of Canada. Rates will rise as summer arrives and we have already seen some mortgage rates increasing a little. We are also coming closer to the end of the First-Time Home Buyers’ Tax Credit, which is in all likelihood going to have an impact on the housing market. Finally, the shortage of new listings, which we have been encountering since the autumn of 2009, is slowly letting up. Jay Banks of Vancouver Lofts says: “There has been an enlarging influx of new listings over the last 2-3 months, which has helped to steady the inventory level.”
More levelled sales and prices of properties settling at acceptable figures, is probably going to be the outcome of all these points starting to come together.
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