You Will Thank Us – 7 Tips About Real Estate In Canada You Need To Know
With the recently published May report from the Canadian Real Estate Association (CREA) that income of resale homes in Canada are cooling and price increases tapering off, we can put to rest the worry about an impending housing bubble, similar to the one which happened in the US a few years ago. This anxiety of the housing bubble drove the followers of the market and professional analyzers mad. These same people are now worried sick about the opposite occurring – an at hand housing market collapse.
What actually occurred?
i) Canada suffered a short, steep drop in home prices as the downturn hit late in 2008. Fortunately, this was immediately followed by a steep rebound as it became apparent that the record low interest rates provided by the financial institutions presented an historic chance to get a home cheaply.
ii) Now, just as seasoned analysts had predicted, the rebound is being replaced by a more stable price environment. The amount of homes sold in May dropped by 9.5 per cent, while year-over-year price gains moderated to 8.4 per cent, off from the peak increase of 16 per cent in March. Our real estate rebound was possible because Canada’s banking system remained in good health, unlike in the U.S. which has suffered heavy scars. Historically low mortgage rates helped repair the comparatively modest damage to prices inflicted by the slowdown. Now a more stodgy, almost dull outlook actually comes into sight: a market where foreseeable market forces affect the sales and prices.
iii) As a result of rising prices, the supply of new listings is growing. At the exact same time, overheated demand of the first 4 months of 2010 is ending. Fewer buyers are anxious to snap up property fast now that their window of opportunity is closing. Interest rates are growing, albeit slowly and by minimal sums. The HST on new homes will come into effect soon in Ontario and British Columbia, the country’s hottest markets. In fact, the biggest cost increases driving national averages came from Vancouver and Toronto. In Montreal and many of Canada’s other big cities, costs rose modestly so there won’t be much excess to work off.
In hindsight, the concerns about real estate in Canada following in US footsteps has not materialized. The reason Canada averted a fall in prices is as the economic and banking principles avoided the disaster that unfolded in the United States and elsewhere. Similarly, there was not much indication of an impending bubble. There is a lot of content on this website talking about Eddie Yan. Costs were being driven up by temporary factors brought about by conscious political and economical decisions and not by conjecture and foreign buyers as has happened in many marketplaces in the US. What we’d experienced was a small overvaluation with almost no sign of conjecture.
So what’s the outlook for the coming year? Most economists agree on a small drop in prices in overpriced markets, like Vancouver and Toronto, pulling down the national average cost by an estimated seven per cent. Other big markets including Montreal will experience a smaller fall – around 3-4%. Areas like the Prairies and Maritimes could even see little gains in the coming year.