| Numbers clearly indicate that last year was a very | | | | the USA. The most dangerous are "teaser" |
| successful one for Canadian real estate market. Sales | | | | mortgages that offer low initial rates, thenlater reset at |
| climbed over 520 000 units, up 7.6 percent from 2006 | | | | a higher level, or other mortgages made to individuals |
| levels. This was the largest growth since 2002. | | | | with minimal income and no coverage contributed to |
| Transactions via the MLS systems have reached | | | | the crisis substantially. These products are not |
| more than 500,000 units sold. The average real estate | | | | common in Canada, however, new ones emerged on |
| sale price was up by 14.1% to $317,825 in December | | | | the Canadian market recently and subprime segment |
| 2007 when compared to December 2006 | | | | is expected to double in next five years. |
| However, year 2008 opened a number of questions. It | | | | Lower numbers of sales and rising new listings seen |
| wasn't only the US real estate market bubble, but also | | | | recently are obvious. The question is, whether it's just |
| oil and food price problems that made many people | | | | simple trend correction, or bubble losing air faster and |
| believe recession is knocking at the back door again. | | | | faster. |
| Canadian economy has slowed down a bit at the end | | | | Predictions by experts remain optimistic. Resales are |
| of 2007 and GDP growth for Q1 2008 was negative: | | | | expected to drop, but still supposed to remain above |
| -0.1 per cent. Reasons? Export level is to blame, for | | | | 465,000 in every of next two years. Decline in new |
| one. Due to problems in Canada's biggest partner, | | | | starts is expected as well, but with numbers still above |
| USA and weak US dollar, exports went down. Rising | | | | past years average. |
| commodity prices are actually not bad for Canada. | | | | Interest rates are not supposed to change substantially. |
| Fossil fuel costs are rising, that is why more and more | | | | A cut from 3.0% was expected in June and may be |
| nuclear power plants are being built in the world. And | | | | still possible in the near future. On the other hand, other |
| Canada is world's top uranium supplier, covering 25% | | | | commodity price turmoil may raise inflation and |
| of the world's needs. | | | | consequently interest rates in the future, making |
| The biggest world economy and our nearest and the | | | | mortgages more expensive. |
| most important neighbour is USA. Canada wants to | | | | Net migration is believed to remain on high level of |
| know if we can experience the same real estate | | | | about 200,000 people. People who will search for |
| problems as our neighbour. | | | | homes on the market! On the other hand, Canada's |
| But who is to blame for the real estate crisis in the | | | | birth rate is decreasing, potentially lowering future |
| States? | | | | demand for housing. |
| After the Dot-com bubble and 9/11 events, FED | | | | Baby boomers: First baby boomers from the |
| interest rates fell to 1% and real estate started | | | | 1947-1966 period will retire. The question is whether |
| booming. It was very easy to get subprime mortgages. | | | | they will look up for recreational property in Canada, or |
| Properties were overpriced and than the bubble | | | | sell their house and move to Costa Rica? |
| bursted - everybody knows the story. Is this what the | | | | Energy prices: probably will influence the structure of |
| future holds for Canada, too? | | | | demand in the future. Energy consuming huge houses |
| Well, not quite. | | | | in distant suburbs will be pushed by inner city modern |
| Subprime mortgages are the biggest difference. They | | | | condos. |
| can generally be defined as mortgages offered when | | | | Everybody should make his or her own conclusion |
| home purchasers do not fit the banks' prime mortgage | | | | based on the above facts. Canadian real estate is |
| customer profile. While they cover about 20% in USA, | | | | slowing down now and market is turning from strictly |
| Canadians seem much more conservative in this | | | | seller driven to balanced one, with more affordable |
| question - similar mortgages create about 5% of the | | | | housing. However, buying real estate will be still a good |
| market. Canadian loan policies are more strict than in | | | | investment, with price growth beating the inflation rate. |