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This figure examines typical signs of bubbles, including the decoupling of prices from local incomes and rents, as well as real economic imbalances such as excessive lending and excessive construction projects.
Toronto ranks third and Vancouver eighth in the global real estate bubble city rankings.
Data show that Toronto is the city with the greatest risk of a real estate bubble in North America. Vancouver, Los Angeles, San Francisco and New York are also considered overvalued.
“judging from the data, house prices in 96 per cent of cities rose in the second quarter, with many buyers treating suburban properties around the city as a second home,” said Robert Reffkin, chief executive of Compass.
You should know that Canada’s unemployment rate has doubled in the past six months. According to previous years’ experience, for every 1% rise in unemployment, house prices will fall by 4%. According to the laws of the market, then Canadian house prices should plunge in half a year.
Experts say that there are four main reasons for this.
First, there has not been a substantial drop in income.
Since the outbreak, Canada has issued a dazzling aid policy in the face of a huge deficit.
Just yesterday, the new “money handout” bill was passed, and as soon as CERB ended, CRB immediately caught up with it, just like before, 2000 Canadian dollars a month for 26 weeks.
It also means that if you get it in full, each person can get up to 13000 Canadian dollars! If the income does not fall, it will be enough to buy a house.
Second, persistently low interest rates.
Throughout 2020, Canada has kept interest rates extremely low, which has greatly reduced the burden on many people to buy homes.
It has also helped to attack the real estate market from the side, and many people think that instead of waiting for interest rates to rise after the epidemic, it is better to buy the house now, and the pressure to repay the loan is at least less great.
Third, working from home has become the mainstream.
From the outbreak to the present, many countries around the world have advocated home work, which can be said to be the most important place.
Not only suitable for life, but also suitable for work, for many people, the requirements are higher, to buy a more reliable house has naturally become the demand of many people.
Fourth, more and more people are changing rooms.
Many Canadian real estate agents said that since the epidemic, many people in China are not only unable to get by, but also unable to get through, so it is mainly local Canadians who change houses during this period of time.
Indeed, now many people feel that apartments can not meet the need for social isolation, so it is not difficult to understand why freestanding houses and urban houses in Canada have recently become so popular.
But the question is, will house prices in Canada continue to rise before the end of the year? The famous Moody’s Analysis (Moody’s Analytics) doesn’t see it that way.
According to CBC, Moody’s latest report believes that under the impact of COVID-19 ‘s epidemic, unemployment has risen, household income has shrunk, buyer confidence has faded, and house prices across the country will fall next year, with the average house price of independent houses estimated to fall 6.7 per cent next year.
Ms. Singh, an analyst at Moody’s, believes that during the epidemic, under multiple factors such as government bailouts, preferential bank policies and ultra-low interest rates, the housing market can remain invincible for the time being, but house prices will fall unstoppably in the future, and even lower interest rates will not be enough to save the market.
Many other experts claim that the real estate bubble will burst in 2020.
We have experienced a market crash this year, but house prices have not changed as we thought. The low interest rate environment is driving more sales, and as potential buyers continue to buy homes with mortgages, we may eventually see a serious housing bubble burst.