The confusion with the current state of the Canadian housing market began when interest rates were set to record lows early last year. That created a surge of homebuyers, and of home sellers that knew those buyers were ready to pay whatever price was put on a home. That led to home prices climbing and climbing, until everyone started talking about the housing market being in a bubble. That talk died down some, when experts said that housing prices would level off, eliminating the presence of any bubble. But now, experts seem to be at odds with each other. Are prices going up or down? And what impact will that have on Canadian homebuyers and Canadian mortgages?
Canadian Imperial Bank of Commerce chief executive officer Gerry McCaughey recently said that he was seeing signs of the housing market “peaking,” meaning that once it did, home buying would slow down and home prices would continue to come back down. This, McCaughey says, is due to the fact that consumers are now becoming more aware and serious about their own debt, and that this will limit the amount of interest in the Canadian housing market. McCaughey’s predictions certainly seem to be in line with what the Royal Bank and Bank of Montreal believe.
Those two lenders (who also happen to be two of the biggest lenders in Canada,) are currently worried about a huge influx of inventory in major Canadian cities such as Toronto and Vancouver. While oversupply has been an issue in Vancouver for awhile now, it’s Toronto that currently has more condominiums under construction than any other city in North America. Even if homebuyers continued to express interest in these cities, it still simply wouldn’t be enough to keep up with demand. The good news is that for buyers, this will mean a decrease in prices.
But those at Royal LePage are shaking their heads. These housing experts say that 2012 is going to be a great year for the housing market, for both buyers who will still enjoy low interest rates; and sellers who can expect prices to increase. That’s correct. If the two sides both turn out to be right, we could have a huge oversupply of over-priced real estate. Those at Royal LePage say that there are certain markets in particular that can expect to see a lot of growth in the coming year. While the nation on a whole will see an average of a 2.8% price increase in homes Calgary, Regina, and Winnipeg will see an increase of 4 to 5 percent. The report from Royal LePage also pointed to the fact that home prices rose 9% last year and compared with those numbers, a heavily over-priced market doesn’t seem likely either.
It’s no wonder that Canadians are confused! Are prices going up or down? And what are interest rates going to be doing in the meanwhile? It’s all the fun of another year, and waiting to see what the Bank of Canada is going to do. But in the meantime, if you’re thinking of buying a home, contact a Toronto mortgage broker who can help you get that property, at a reasonable price, to help you sort out the confusing market – and how you can get the most for your dollar!
