What is going on with the Canadian Real Estate Market?
We are all aware of the plethora of articles out there that are creating chaos in the industry pertaining to a housing meltdown. Here are a few of the catchy titles in case you missed them:
Is Canada's housing market cooling or crashing? - Globe and Mail
Housing market will crash: research firm - Globe and Mail
Housing correction underway in Canada, 'soft landing' likely: bankers - Financial Post
What can we make of all this? Experts from around the globe have compiled their own theories, thoughts and analysis. At the end of the day, it's anyone's best guess and no one truly knows the outcome. Will there be a sharp decline in prices or a soft price erosion? Has this happened already?
Here's what we do know. No one can predict home prices and at the end of the day, your home is worth what someone is willing to pay for it. End of story. Having said that, even in uncertain economic times like these, real estate has proven to be one of the most sound investments a family can make. According to most of the research on housing trends, prices usually stay at the same level as or most often appreciate faster than the rate of inflation. With mortgage rates at the lowest point in decades, real estate is definitely becoming an attractive investment.
Many of my clients are first time home buyers and I have definitely noticed the impact on this group since the new mortgage rules were implemented on July 9th. Earlier this year, Finance Minister Jim Flaherty was banking on interest rates rising. As of June, interest rates continued on their downward spiral with many lenders implementing rate specials which inevitably sparked a couple of rate wars. Flaherty had enough and made a stark announcement which shocked the lending world. Here is a recap of his latest regulations:
Shockwaves sent through the marketplace
These rules were initially projected to impact first time home buyers by only 5 percent but that number is more like 15 percent today. First time home buyers are not the problem with debt levels in this country and therefore, these latest regulations are targeting the wrong consumer group. Let's face it, consumers consume. Home owners with great credit are now forced to take out lines of credit as opposed to refinancing at lower rates if they wish to perform some renovations on their property or strictly use at their discretion.
Before you decide that this is not a good time to invest in residential property, re-examine the financial benefits of owning your own home and put them to work for you. I think we have lost the perspective that real estate is a long term investment and if purchased with the assistance of professional real estate agents, mortgage brokers and financial advisors, you will reap the benefits over time.
Interest rates are still at an all time low and securing a 5 year fixed rate for about 3 percent in today's market is quite remarkable. As I have always mentioned in the past, your mortgage is not just about the interest rate, the true savings are with the actual flexibility of the product. If you end up rate shopping on your own, it's buyer beware with some of the rate specials advertised as they could end up costing you thousands in the end. I encourage you to contact me for your free consultation as I will explain the fine print in detail. The savings and benefits could be astronomical!
As always, I encourage you to contact me if you have any questions with your current mortgage or are looking for one. Please find me on facebook at facebook.com/jnmortgages on twitter @jasonmortgages.
Jason Nesseth with TMG The Mortgage Group Canada Inc. If you have any questions or comments about this blog, please feel free to call Jason at 604.375.7375, email jason.n@mortgagegroup.com or visit his website at jasonnesseth.com