Spring is in the air...finally. Robins will soon begin feathering their nests, migratory birds will be returning, crocuses will start pushing their way through the newly softened earth...and in this the spring of our economic discontent we'll also be seeing lots of For Sale signs sprouting up.
Canada hasn't seen an implosion in Real Estate values similar to what's happened in some parts of the United States, at least not yet. But with the Canadian economy tethered to the fate of our southern neighbours, as their economy sinks further I expect to see us being dragged down as well. How far? In my opinion a decent barometer is to take stock of where the U.S. economy is now with the reasonable assumption being that we'll see a similar decline over a 60-90 day period.
In terms of the Real Estate market it isn't a pretty picture. Word out of the U.S. is that 1 in 5 mortgage holders is in a negative equity situation, that is to say that more money is owed on the house than its current valuation. Some will contend that Canada didn't engage in so called "sub-prime" lending practices, which is true...but we did have lenders offering no money down financing with 40 year amortizations. Our situation might be better here, but I think it will simply turn out to be a matter of degrees.
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The laws of supply and demand dictate that when there are lots of properties on the market and a limited number of buyers, that prices trend downward. With lay offs and job losses being reported daily it is logical to assume that many will be forced into listing their homes. Obviously in places like Oshawa/Whitby, Windsor and anywhere else where auto manufacturing is a key component of the local economy things stand to be worse...likewise with Hamilton and steel.
For those looking to buy the coming months could offer a great opportunity, both in terms of selection and price. While Ottawa tosses around billions to prop up businesses and for infrastructure spending, little is being done for Canadians being body slammed by this recession. The best thing to do in a situation like this is often to sit tight and wait for the storm to pass. But without leadership from Ottawa and tangible help from programs like EI...waiting out the storm will not be an option for some.
Comments are welcomed, I read them all. Feel free to pass this blog entry along via email or through a social network like FaceBook, just click on the ‘Share This’ icon below.
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Canada hasn't seen an implosion in Real Estate values similar to what's happened in some parts of the United States, at least not yet. But with the Canadian economy tethered to the fate of our southern neighbours, as their economy sinks further I expect to see us being dragged down as well. How far? In my opinion a decent barometer is to take stock of where the U.S. economy is now with the reasonable assumption being that we'll see a similar decline over a 60-90 day period.
In terms of the Real Estate market it isn't a pretty picture. Word out of the U.S. is that 1 in 5 mortgage holders is in a negative equity situation, that is to say that more money is owed on the house than its current valuation. Some will contend that Canada didn't engage in so called "sub-prime" lending practices, which is true...but we did have lenders offering no money down financing with 40 year amortizations. Our situation might be better here, but I think it will simply turn out to be a matter of degrees.
(Blog entry continued after advertisement)
The laws of supply and demand dictate that when there are lots of properties on the market and a limited number of buyers, that prices trend downward. With lay offs and job losses being reported daily it is logical to assume that many will be forced into listing their homes. Obviously in places like Oshawa/Whitby, Windsor and anywhere else where auto manufacturing is a key component of the local economy things stand to be worse...likewise with Hamilton and steel.
For those looking to buy the coming months could offer a great opportunity, both in terms of selection and price. While Ottawa tosses around billions to prop up businesses and for infrastructure spending, little is being done for Canadians being body slammed by this recession. The best thing to do in a situation like this is often to sit tight and wait for the storm to pass. But without leadership from Ottawa and tangible help from programs like EI...waiting out the storm will not be an option for some.
Comments are welcomed, I read them all. Feel free to pass this blog entry along via email or through a social network like FaceBook, just click on the ‘Share This’ icon below.
Back To Canadian SoapBox Home
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