Why its Great to be Canadian
January 21, 2009
With all of the headlines of doom and gloom, it is important to remember how great it is to be Canadian!
Even though Canada’s economy is linked to the U.S it certainly doesn’t mean that we are on the same path, especially when it comes to real estate. Yes there has been a slow down. That is good considering where housing prices vs. affordability was heading. Compared to 2007 which was the Tiger Woods year in real estate, anything comparable could look like a downturn. Canadians should feel secure about our housing market long term.
CMHC (Canadian Mortgage and Housing Corporation) has been a force of stability in providing home insurance, and our banking system resisted handing out mortgages to anyone with a pulse over the last years, unlike in the U.S.
There are many variables to what has occurred in the U.S and global markets over the last year. However here are some Canadian facts to consider; The International Monetary Fund recently ranked the Canadian Banking System as the most stable and secure in the world. The U.K and the U.S ranked 40th and 44th respectively.
Housing Affordability typically should not be more than 32% of a borrower’s gross annual income. If we look at a standard condo in Alberta for example, the affordability index was 28.2% in quarter 3 of 2008, and 30.9% in Ontario in that same quarter. (Source: Statistic Canada, Royal Lepage, RBC Economic research) So homes are still affordable. From 2007 to 2008 when looking at average housing price decrease it has been a minimal $10,000. Not too bad when you are looking at longterm holds anyway. There are many areas in Ontario that are still getting big business investment dollars and new inovative projects on the go. The techtriangle being one of them. Darlington Nuclear Plant is looking to fill 1,300 jobs. Our national average for sales on the MLS (multiple listing service) only fell 4.7% per cent last month. Compare this to the 33% in Phoenix, or 32% in Las Vegas and comparably we are doing well. In Canada ”At the end of the day we will have outperformed much of the rest of the world, certainly the rest of the G7″ BMO Sheery Cooper said Jan 7,2009.
Benjamin Tal, leading economist said “Is this a crisis? No. Is it pretty? Still no, and you will lose 2 years of price appreciation. But this is part of the economic cycle. Canada never had a subprime problem in the league of the U.S, which means a market correction here will be more moderate.”
For investing in real estate, long term hold is what we are looking for and areas with a future. Real estate is still one of the safest long-term investments a family can make. 2009 may very well be a slower year than our booming 2006-2007 however NOW is the time to buy when certain stronger markets are low, and knowing that the strength of Canada as a whole. Understanding you have to buy in specific markets in specific towns. Know what to look for in terms of the fundamentals of real estate and markets, political climate, job growth, transportation etc. Or work with a team who assesses all angles and has an exit strategy, and knows what your money can do for you.
