Unknowingly, the market rebounded quicker than anyone expected. In the spring of 2009, Canada saw the about face of the housing market, we observed sales figures continuing to shoot up in the following months. In the winter of 2009/2010, realtors were disclosing sales increases in excess of 100%. At the same time the housing prices even overtook the pre-crash prices.
So why does the Canadian housing market do better than the rest of the world? Let's have a look at the rationale why. Speaking to the specialists, the majority say that this recovery is mainly due to the low interest rates put in place by the Bank of Canada. This low rate supported the Canadian housing market and even though the US attempted to do the same thing, they didn't see the same results:The Canadian mortgage market was not as riddled with sub prime mortgages as observed in the US market. Approximately 5% (potentially upwards of 10%) of loans in Canada can be assigned to the sub prime class, while sub prime loans in the US took a 22% share of all loans during the critical years, 2006-2008.
Canadian banks are over and over again ranked as the most secure in the world by the World Economic Forum. The way the banks and other financial institutions dealt with the recession is another reason why Canada averted the credit crunch for the most part.
Since last summer our economy has seen jobs arising so although we had a rise in unemployment like the US, it has improved quicker. Also, Canada's social system helped to reduce personal bankruptcies.
To sum up, the Canadian housing market is on a solid footing. Where there is good news, some people look to the negatives and say that a housing bubble completely separate from what has gone on, is getting ready to hit us. From my own scrutiny of the housing market I don't accept this for a minute.
The Bank of Canada promised to keep rates stable until summer 2010. Rates will grow as summer arrives and we have already seen some mortgage rates increasing slightly. Similarly despite not having an official finish date, the window for taking advantage of the First-Time Home Buyers' Tax Credit is slowly dwindling. We also have seen, the shortage of new properties listed, which we have been encountering since the autumn of 2009, is slowly letting up. As Jay Banks from Vancouver Lofts, adds: "There has been an expanding influx of new listings over the last 2-3 months, which has helped to balance the inventory level."
More levelled sales and prices of houses settling at tolerable figures, is probably going to be the outcome of all these points starting to come together.
picture by -AX-
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