Transitions-Oakville, Burlington and Mississauga Real Estate Blog: January 2008

The U.S. real estate market continues to be plummeted by the sub-prime mortgage fall-out and the question I get asked most often by home-sellers these days is "Will we be affected negatively by what is taking place in the U.S.A.?"

I assure anyone I'm conversing with that Canada's real estate market and economy is alive and thriving.
The Canadian employment level is at an all-time high and current interest rates are very stable and appealing to home-buyers. There is an abundance of buyers and a shortage of listings, particularly for first-time buyers.

The sub-prime mortgage fall-out which the U.S. is experiencing, will not occur here as, contrary to that in the U.S., high-ratio mortgages (80% of the property value or higher) from Canadian financial institutions must be insured.
Additionally, sub-prime mortgages represent only 5 % of the Canadian mortgage market as compared to 22 % or more in the USA. To understand what is taking place in the U.S.A., take a moment out to watch this video from 60 minutes which aired last night.
In the article, take a close look at the map and it will give you an idea of just how all-encompassing this debacle has become.

Canadian real estate values, although their rate of increase has slowed slightly, continue to rise and will likely continue to do so over the next 2-3 years.
At that time, we may begin to experience a leveling off of prices once the impact of the coming recession in the states begins to take hold on our manufacturing and export market.

The truth of the matter is that the sub-prime mortgage write-down in the U.S. is currently at a point of over 100 billion USD.
That amount is expected to triple before they begin to see a change in a positive direction.
When we are dealing with figures as high as this, the global economy will feel the waves and along with it, Canada's economy will be impacted.

Canada is in an excellent position, globally, with vast reserves of highly valued and in demand resources such as oil and minerals. Our labour force is strong and our educational system is one of the best in the world.

Canada's strong commodity markets will continue to grow and this will bring a steady rise in property values for the four western provinces.

With close to 80% of all of Canada's exports destined south of the border, a major economic slowdown in the USA will mainly affect the central provinces and the greatest leveling out of real estate values will be felt in Ontario and Quebec.
However, I anticipate Ontario's property values will continue to rise in the coming years due to the steady growth of the population and the balancing from Canada's commodity and energy sectors.

It's an excellent time for buyers to purchase right across Canada with low interest rates, a steady inventory of reasonably priced properties and an economy which will continue to remain strong and show significant growth in the coming years.

©2008JoSmith