Canada housing market touching the peak of sustainability
by neha - March 6, 2011
All the countries have been facing financial hardship because of the recession of 2007-2009.
The countries mostly affected by the recession are the European countries and America. In addition, the household debt in these countries has been increasing. Thus, the real estate sector too has been facing lows. However, the situation is a bit different in Canada.
Improvement in housing affordability
The Canadian housing market is regaining its balance and the housing affordability is improving. Though the housing affordability is not at par with what it was 15 years ago. But this is true that the housing market is improving. The reports released by the RBC as (their quarterly housing affordability publication). The data reveals the details of the third quarter of the year 2010, the period between July to September. There has been a drop in the yields of bond and the fixed mortgage rates have lowered. There has also been a slight downward movement in the year-over-year home prices. Thus, the measure of the housing affordability actually improved over time and that too for the first time since the second quarter of 2009.
However, with the improving economy, the banks have again started to raise the interest rates. This may pose a problem for the people. Thus, there should be a rise in the number of jobs and a rise in the income of those people already into some kind of jobs. According to the housing and financial experts, this may not bode well for the coming future. This won’t be good for the position of the real estate in the city where people spend at least 50 to 60% of their total income to carry the cost of a home. The real estate issue is now masked by the extremely low interest rates. The scenario can change when the interest rates will rise with the inflation or when the people’s income falls and if the unemployment rises due to deflation and austerity. It won’t be good either way.
Two main trends have been noticed and these are the decrease in the residential mortgages mainly held by the lenders and banks and the second is the massive 45% increase in the mortgage backed securities between the years 2008 and 2009. MBSs now probably account for 30% of the whole mortgage market and virtually 100% of the mortgages growth.
However, the Canadian housing market is in much better condition than that of the American housing market.
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