Festival condos price list.House prices in Canada are skyrocketing. Now everyone knows that house prices are rising too crazily, and many people think it is due to low interest rates, making borrowing costs too low.Please Visit: Festival condos price list to Get Your VVIP Registration Today!
But a North American economist puts forward another point of view. He believes that the idea that “Canadians firmly believe that house prices will only rise” has led people to keep chasing upward in the market.
The economist said that Canada’s real estate market is out of touch with reality, and that low interest rates and even the global epidemic are only part of the reason, and he expects liquidation to come soon.
It is reported that house prices in Canada have been rising steadily, which is not surprising to anyone, especially home buyers. Over the past 20 years, average house prices across the country have risen by 375%, while prices in Toronto and Vancouver, the two hottest markets, have risen by 450% to 490% respectively.
Today, the average price of a house is $686650, according to the Canadian Real Estate Association (CREA). In Ontario, the average price jumped to $887290, while in British Columbia, it was $913471.
Even in smaller markets, such as Tillsonburg or Bancroft in Ontario, house prices have risen sharply. The epidemic has forced workers and families in remote areas to leave cities and accelerate home purchases in less populated communities.
According to the report, house prices in Canada are rising much faster than any other developed country in the world, so a new economic term has emerged to describe the market: “housing inflation” (shelter inflation).
The head of North American strategy and economics at Macquarie Group, a global financial services firm, expressed concern, noting that Canadian house prices were out of line with other important factors, such as income and people’s ability to pay for high-priced housing in the coming years.
While the main reason for the boom in the Canadian market is low interest rates, as low borrowing costs reduce the burden of large mortgage payments, Doyle offers another explanation.
‘There is a mentality at work in Canada that house prices can only go in one direction: rising,’he said.
“it’s a self-propelled idea,” Doyle said.
This is best illustrated when comparing real house prices and real incomes in Canada and the United States.
Doyle explains that, as shown above, incomes and house prices in Canada and the United States have been at quite similar rates for decades since the 1970s and have been in sync until the end of the 2000s.
Then, in Canada, the red line representing house prices goes beyond the chart, deviates from income, and deviates from the situation in the United States.
“the difference is house prices,” Doyle said.
Between 2008 and 2009, the United States suffered a severe stock and housing crash caused by the subprime mortgage market. In short, too many Americans are saddled with home loans and mortgages they cannot afford.
For a variety of reasons, such as stricter mortgage eligibility rules, Canada’s real estate market was largely unaffected by the crash and did not suffer the same adjustment.
However, as the US housing market recovers, Canadians may soon have to pay the price.
Doyle explained that the 2008 / 09 crash had a significant impact on the psychology of US investors. “in the United States, people don’t think of housing as a safe asset.”
“in Canada, what happened in 2008 / 09 reinforced the idea that houses never fail and that house prices only rise.”
Doyle says that while low interest rates have fuelled Canada’s real estate boom, this is only part of the problem. He pointed out that both Canada and the United States operate in a similarly low interest rate environment. Higher real estate prices mean that a family’s ability to buy a house is stretched, even though the burden of mortgages has been reduced.
He is worried about what will happen in 2023 and beyond once interest rates start to rise. Home buyers at the peak of the market between 2019 and 2020 will face higher interest rates when their loans are renewed.
“by 2023, things began to change. I am more worried that after 2024, when the Bank of Canada will raise interest rates, the housing market will be affected. ”
‘The solution is complex and requires a comprehensive rethinking of the Canadian real estate market,’he said.
Currently, more than 10 per cent of Canada’s GDP comes from residential real estate activities: renovation, resale costs and real estate commissions.
“this proportion is too large to be sustainable. It distorts the economy. ” Doyle said.
According to research by Macquarie, housing investment as a share of the economy in Canada is higher than in any OECD country except New Zealand. It exceeds the amount of business investment in Canada.
This means that, as a country, Canada spends more on housing than it produces or manufactures, which will eventually affect our ability to pay for housing.