Tel: 416-835-8805  Email: info@bestinsuranceguide.ca
中 文
Online Inquiry
Live Help
BUY Dental Plans
Manulife
Flexcare Health
& Dental Plans

BUY Travel Plans
Manulife
Visitor to Canada
& Travel Insurance

Tel: 416-835-8805

Jake Jun Qiao, Certified Financial Planner (CFP), Chartered Life Underwriter (CLU), Member of Million Dollar Round Table (MDRT). Please contact me for any financial planning inquires.

 

Position: Home - News & Events
Canada braces as housing slowdown takes hold
Post Date: Nov. 04, 2011

Long convinced the country’s housing boom would never end in a crash, Canadians have watched this autumn as a sharp slowdown in real estate spreads across the country, leaving would-be home buyers hopeful and sellers scared.

“The power is in the hands of the buyer – that’s what I’m feeling,” said Andria Petrillo, 32, as she and her husband toured a quiet open house in the heart of Toronto, where crowds and chaos once reigned over weekend home showings.
 
Sellers will commonly say, ’I’m going to wait until the spring, when the market is better.’ And I warn them that it could be worse
But like most people shopping for a new home, Petrillo has to sell her old one first. And that’s where she worries.
 
Forget condos, REITs are where you'll find sky-high returns
 
“With the economy, I’d like to sell now. I worry about selling because it’s a condo, and that market is cooling even faster than houses,” said the newly married sportscaster. “We can’t sell it for a ridiculous amount of money any more.”
 
Signs are everywhere that Canada’s long run-up in house prices is over, hit by a combination of tighter mortgage lending rules and growing consumer reluctance to take on more debt. Sales of existing homes are down steeply, with condo sales hit especially hard, and some long-booming prices have started to fall.
 
Sales always slump as the real estate market heads into winter. The big question will be whether spring brings renewal, or confirmation that the party is over.
 
DEBT RISES, GDP FALLS
 
Canadian households hold more debt than American families did before the U.S. housing bubble burst, which has led the government to tighten mortgage lending rules four times in four years.
 
And data released on Wednesday showed the Canadian economy shrank in August, an unexpected downturn that bodes ill for housing even as the U.S. economy shows signs of recovering.
 
The debate in Canada is whether the market will come down with a thud or make a relatively soft landing, as most mainstream economists predict. They see a 10 to 15% correction in prices and a slowing in housing starts to 180,000 a year by 2014, down sharply from the 220,000 range today. In that scenario, GDP growth would be cut by 1 to 1.5 percentage points, according to CIBC World Markets.
 
The Bank of Canada has forecast economic growth of just 2.3% in 2013 and 2.4% in 2014.
 
“In a final analysis, not all is well in the Canadian housing market,” CIBC economist Benjamin Tal wrote in a recent report, pointing to prices that have overshot fundamentals in large cities like Toronto and Vancouver.
 
Tal believes slower sales activity will be followed by falling prices in many cities. But he says Canadian lending standards have been higher, and borrowers more cautious, than in the United States before its crash, which will prevent large-scale mortgage defaults and plunging prices.
 
Mindful of what happened in the United States, the Canadian government has tightened mortgage rules to prevent home buyers from taking on too much debt. While interest rates are low and expected to stay low into 2013, the fear is that eventual rate hikes will drive borrowers out of their homes or into bankruptcy.
Home     |     Online Purchase     |   News & Events   |     Other Service     |     FAQ     |     Contact Us
Copyright © 2012 - 2018 Insurance Centre. All Rights Reserved.