Posted by genieSABRE on Aug 8, 2012
What next for house prices?

What next for house prices?

The longer-term forecasts: gloom or growth?

  

Source: Hannif Highclass   c/o   Genie Sabre Realty Inc.
Publish:MY BLOG: Toronto Real Estate: August 8, 2012

The market outlook

House prices are suffering another wobble with most major reports show house prices falling once more and analysts predict a tough year ahead.

But considering the dire economic backdrop, the property decline is still modest – so can house prices continue to battle against the tide or are bigger falls on the way?

Here the latest house price news, predictions and market reports, analyzed by The Canadian Press property expert Julian Beltrame,

Canadian house prices are due for a 10 per cent correction — and likely even more in overheated Toronto and Vancouver — but will likely avoid a U.S.-style collapse, according to a Scotiabank report.

Economists from the chartered bank said in a report Wednesday that average Canadian house prices will likely experience a cumulative 10 per cent drop in the next two to three years as demand softens.

Pent-up demand has been effectively exhausted after a decade-long housing boom, with Canadian home ownership at record levels.”

Where is the pent-up demand?!?

Please tell me!

Yes, we respect the momentum in new home construction.
Yes, we can see the stimulus the home buying frenzy, both monetary and fiscal
Yes, there might be “cash available for down-payment – both personal or gifted.
Yes, frightened buyer’s might be chasing their dream of landownership.
Yes, the recession has been short and shallow.
Yes, housing has become so much cheaper.
Yes, the average buyers – earnings have increased but not much.
Yes, we can!
But please tell me where the pent-up demand is?

Interest Rates:  Banks moved from low interest rates to ultra low levels to stimulate domestic spending.

Effects of ultra low interest rates:

  • More affordability means more qualified buyers
  • More buyers means bidding wars for limited supply of homes on market
  • End result in higher home prices!
  • and a warnings that some homeowners may find it difficult to service their debts when interest rates inevitably rise.

The bank predicts housing starts will slow to more a sustainable level of 185,000 to 190,000 a year, from the current average of close to 220,000.

In June, Finance Minister Jim Flaherty cited Toronto and Vancouver’s hot condo market in his reasoning for a further tightening rules on government-insured mortgages by reducing the maximum amortization period to 25 years from 30.

The headwinds facing the market

The economists say the most likely outcome is that the housing market will adjust as it has in the past, when booms in the 1970s and 1980s were followed by flat or declining prices that lasted almost a decade.

However, they warn that there are risks of a sharper drop should the weak global economy impact job creation and investment in Canada.

 


 


REMEMBER: Real Estate

Home Owners: If, you already own a home – good for you!

May you be blessed with
warmth in your home,
love in your heart,
peace in your soul
and joy in your life.

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genieSABRE recommend you check out our main web site. You will not be disappointed!

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Real Estate Investors: Home ownership should be your 1st. priority. If you own your own home – Good for you. But now is the time to take that second step – Buying Rental Property for investment. Commercial, retail or home.
genieSABRE has extensive knowledge and experience in this field. As a developer of commercial /retail plazas (built 3 so far) and owners of residential rental homes, we can guide and advice you as to what is best for you according to your personal financial position.

Call: Hannif Highclass @ 416.444.4252

http://www.geniesabre.com

 

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