The Housing Market in Canada: Good News
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A very assured look at the Canadian real estate market was written in a current article from Scotia Capital. The report debates why the real estate market around the world rates second to the Canadian market. Is the destiny more for a bullish or a bearish trend?
Good circumstances in the Canadian market are pointed out by several factors. Although there was a big increase in listings at the start of the year, these went very quickly. It goes hand in hand with the stock of unabsorbed newly constructed homes, which fell mainly due to the inevitable reductions in developers’ margins. There is little in the way of hidden stock of foreclosed homes. The by far the greatest headache in the US market is the hidden stock of foreclosed homes.
Experts believe that the inducements given over the last year are what have stimulated the Canadian real estate market, though the accepted good health of the market is in debate. Unlike USA, where the tax stimulus package is time restrained and has mainly a short term effect, Canadian packages mainly don’t have an expiry time.
We are talking about RRSP withdrawal limit increase, first-time home buyers’ tax credit, home renovation tax credit or energy and home retrofit tax incentives and rebates, not to mention local encouragements. The Canadian real estate market was in a great situation in relation to the rest of the world, made even better by the assertive thinking attitude of the Bank of Canada.
This goes to demonstrate the bullish or upward trend of the real estate market. There are a few probable market ‘landmines’ to avoid. Experts with the Scotia Capital are troubled about the condo market in Canada. Newly built condos are not selling very well and leading to a stockpile of unabsorbed new builds. The Canadian Mortgage and Housing Corporation have published estimated statisics about these condos and experts think there is a growing pressure for condo prices to drop to halt this build up.
Real estate investors should continue to see the Canadian real estate market as a great investment. But it is important to keep an eye on the indicators closely, particularly in the condo sector. Another question about the bullish or bearish prospects comes for the federal government. The results of all these real estate incentives are not going to go on endlessly. Shuffling of the later demand to the present over time can cause a severe jump in listings later. As a result these policies should be removed carefully and gently.
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