Part 4 of a 5 post series
Someone said to me recently that they thought we were nearing the bottom of the market. I couldn’t disagree more and I think there is more bad news ahead and we still have a way to go before balance returns to the market. There is an overbuild of inventory to clear and more importantly, countries around us that need to stabilize their financial and banking systems. That’s going to take a little while.
I do however want to say again what I said in the last post. What goes down, always goes up. Stop reading the media reports whose goal it is to sell their product. We are NOT Iceland, Britain or the U.S. In an email to REALTORS® this week from RE/MAX Ontario-Atlantic Canada Executive Vice President, Michael Polzler, he did a great job of outlining some of the fundamental differences we have in Canada compared to these other economies:
1. Subprime mortgages represent less than five per cent of our market nationally.
2. Foreclosures occur in about one quarter of one per cent of mortgage transactions in this country.
3. Canadians have more equity in their homes.
4. We have less debt than our neighbours south of the border.
5. Speculation has played little or no role in existing home sales in Ontario.
6. The fundamentals of our economy are relatively solid. Of the G8 countries, only Canada is expected to show growth in 2008 and 2009.
7. The Canadian banking system is one of the best in the world, relying more on old-fashioned lending than innovative financial products geared toward profit.
8. The Canadian job market is stronger than the US, adding more than 200,000 jobs so far this year.
9. Interest rates remain favourable.
10. Housing values in Ontario major centres did not experience serious, double-digit price appreciation year-after-year for an extended period. Our markets were characterized by stable, healthy growth.
11. Immigration continues to play a key role in housing markets. Between 2001 and 2006, more than 1.1 million immigrants came to this country, with about half settling in the province of Ontario. Immigrants tend to purchase a home within the first five years of living in Canada.
In a nutshell, the stability of our banking system ranks #1 in the world and, the current market reaction is not caused by distress sales, foreclosures or bank failures such as in the U.S.
Yes, I think the market will still go down and yes, this also presents great opportunities for those who are ruled with their heads and not by fear instilled in their hearts. It’s time to take a breath and use our heads as we go through this cycle. Know the signs of market bottom and then watch for them. Consider all the facts before making decisions. Chose to work with a REALTOR® who can be a trusted advisor.
Next post: Signs of the Real Estate Market Bottom
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The Things Buyers Need To Consider Right Now