Read This Controversial Article And Find Out More About Canadian Real Estate
With the recently released May report from the Canadian Real Estate Association (CREA) that sales 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 that happened in the US a few years back. This anxiety of the housing bubble drove the followers of the market and professional analyzers mad. These same individuals are now worried sick concerning the opposite happening – an at hand housing market collapse.
What actually happened?
i) Canada endured a short, steep drop in home prices as the downturn hit late in 2008. Luckily, this was instantly followed by a steep rebound as it became obvious the record low interest rates provided by the financial institutions presented an historic chance to get a home cheaply.
ii) Now, just as experienced analysts had forecast, 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 increases moderated to 8.4 per cent, away from the peak gain of 16 per cent in March. Our real estate rebound was possible because Canada’s banking system stayed in good health, unlike in the U.S. which has suffered deep scars. Historically low mortgage rates helped repair the comparatively modest damage to prices inflicted by the decline. Now a more stodgy, almost dreary outlook actually comes into sight: a marketplace where foreseeable market forces affect the sales and prices.
iii) As an effect of rising prices, the supply of new listings is growing. At exactly the same time, overheated demand of the first 4 months of 2010 is ending. Fewer buyers are anxious to snap up property quickly now that their window of opportunity is closing. Interest rates are increasing, albeit slowly and by minimal sums. The HST on new homes will come into effect soon in Ontario and British Columbia, the nation’s hottest markets. Actually, the biggest price gains driving national averages came from Vancouver and Toronto. In Montreal and many of Canada’s other big cities, prices 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 hasn’t materialized. The reason Canada prevented a fall in prices is because the economic and banking principles avoided the disaster that unfolded in the US and elsewhere. Likewise, there was not much indication of an impending bubble. For holistic information on Eddie Yan go to this page now. Costs were being driven up by temporary factors caused by conscious political and economical decisions and not by speculation and foreign buyers as has occurred in many markets in the US. What we’d experienced was a small overvaluation with very little sign of speculation.
So what is the prognosis for the coming year? Most economists agree on a small drop in costs in overpriced markets, like Vancouver and Toronto, pulling down the national average price by an estimated seven per cent. Other big markets like Montreal will experience a smaller drop – around 3-4%. Regions such as the Prairies and Maritimes may even see little increases in the forthcoming year.