Canadian’s Government Has Officially Declared Housing Boom As Over!
Canada had been experiencing an all time high market rates in the housing department as the price of the houses had reached skyrocketing heights for the past nine years. It was seen that the sales of homes that started in the West last year reached Toronto in the first quarter of 2008, gaining momentum as the heat of prices reached a nationwide high sales figures, though this boom has been declared officially over as per the latest report by Douglas Porter deputy chief economist at BMO Capital Markets. It was reported that a total of 75,476 homes changed hands in the first quarter of this year compared to the year 2007. Though this figure may have been distorted by a few people. But then the figures may be more or less near the figures mentioned above.
It was announced that the price rose to over 11% last year and 10% on average in each of the prior five years, though the new listing has shown that the prices have increased by nearly 29.8% in Calgary and 52% in Edmonton in the first quarter as the market had run into a brick wall, slowing down the growth and immigration after years of spectacular gains in the housing zone, though most of the economists still do not think that Canada is heading towards housing meltdown as the United States is now facing.
Employment is still strong and the Canadian government is not indulging in high risk sub-prime mortgage as the United States. There is a gradual pay off in housing loans and the loans are so priced that it has been affordable. There has been little of the no-documentation, low-documentation. Caution has been the keyword in the documentation of the mortgage forms especially in the last couple of years. Ted Carmichael the chief economist at JP Morgan states that U.S. housing started at more than two million at the peak of the U.S. housing boom while the Canadian housing boom started at 277,300 at the end of the previous year and the demand has increased a lot as many people have migrated towards Western Canada in search of work.
Though the situation right now is somewhat better compared to the early 1990’s home builders have learnt to sell their homes long before they are even built. Mr. Carmichael though firmly believes that the prices may come down in another year or so and make buying houses affordable.
The ongoing turmoil in the international market especially in the credit card department has had its own impact on the Canadian Banks. Even though the rate of interest has come down from 4.5% to 3.5% banks are facing higher funding rates and are thus very reluctant to pass on the savings totally. There are high hopes that there will be a further cut off in the interest rates by yet another half percent by the spring season, which every Canadian citizen is waiting and watching hopefully.