2 may 2010
According to the CMHC, 9 out of 10 new homebuyers believe ownership is a great investment and that now is the best time to purchase a home.
The housing market became one of the main signs of the economic recovery: the prices and sales are already back.
In a special report, the real estate brokerage firm Re/Max said luxury home sales had risen in the first quarter of 2010.
“These numbers are nothing short of remarkable,” said the regional vice-president for Re/Max in western Canada, Elton Ash.
The Bank of Canada is concerned about super-low interest rates making some taking on more debt than they can afford. Although affordability remains high and the rates are low, household debt has risen to a record $1.47 per $1 of disposable income.
Mark Carney and his deputies have warned that buyers should first of all make sure they can afford a house purchase. We’re speaking not only about the current mortgage, but also about future payments when interest rates rise.
According to the CMCH survey of 2,500 who have actually taken out a first mortgage, or renewed their mortgage in the last year, the majority of them strongly suggest they are doing so with eyes wide open.
81% are “comfortable” with their level of debt. 13% were neutral, 5% were somewhat not comfortable, and only 1% said they were very uncomfortable.
The results are not surprising to CIBC economist Benjamin Tal. Tal’s report tended to undercut concerns that Canadians were significantly vulnerable to rising interest rates.
“The number of people who are really vulnerable is a relatively small number,” – he said.
“Of course, when the interest rates rise there will be defaults rising, but it will not be a crisis.”
Tal says Canadians traditionally adopt a variety of strategies to rising rates, for example, longer-term fixed mortgages.
The other difference between the Canadian situation and that of the U.S., is that lower-income Canadians are more conservative than higher-income buyers, said Tal. Speaking about the USA situation, it’s vice versa.