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The other website that I run is Real Estate related, as that’s one of my biggest interests. One question I get asked all the time, being a Canadian, is “do you think our housing prices are going to drop like the American ones did?” The answer to this is quite simple: absolutely not!
While over the next few years we may see a slight correction in the market due to the recession which it would be silly to say Canada will avoid, we won’t be seeing anything like what is happening in the USA, mainly for one reason: Canada never had sub-prime mortgages, at least not at a mainstream level like what has taken place in the United States.
Sub-prime mortgages offered people who otherwise wouldn’t be able to afford a home the opportunity to buy one anyways. This artificially inflated demand, which created upwards pressure on prices and led to high housing prices in the USA. Canada has also had a housing boom, but it wasn’t artificial, the economy has been good and as such people have been buying more.
In short, while the American demand was artificial, Canada’s is very real. We will likely see a slowdown in growth, and potentially even a small decrease in housing prices, but it definitely won’t be for the same reason as the American real estate market is in trouble.
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[…] Why the Sub-Prime Crisis won’t hit Canada The other website that I run is Real Estate related, as that’s one of my biggest interests. On […]
[…] AllMortgageInformation.com wrote an interesting post today onHere’s a quick excerpt The other website that I run is Real Estate related, as that’s one of my biggest interests. One question I get asked all the time, being a Canadian, is “do you think our housing prices are going to drop like the American ones did?” The answer to this is quite simple: absolutely not! While over the next few years we may see a slight correction in the market due to the recession which it would be silly to say Canada will avoid, we won’t be seeing anything like what is happening in the USA, mainl […]
I think lenders in the US were acting quite irresponsibly when selling sub-prime mortgages at this rate.
On the other hand, the US public was irresponsible as well, by buy homes with mortgage payements they couldn’t afford in the first place.
All in all, I’m happy this won’t hit Canada as bad as it hit the US.
I will be in the marking for buying my first home soon, hopefully we can get a good price, and a good mortgage rate.
Thanks for the comment! I think you can thank the US for the mortgage rate you’ll be getting, which should be a pretty good one! Now is as good a time as any to get into the Canadian market!
You’re very right about the irresponsibility, and they’re paying for it now.
Yea the adjustable rate mortgages (guess the same as sub prime) messedd people up. It started off lower but as the years went by and it increased people couldnt afford it. My family is in the construction business (renovations) and has seen a huge slowdown in work. Sucks.
Ah yeah, that definitely sucks. Up here our lumber industry is going to be in huge trouble because of this, since most of our wood exports go to the USA and a large portion of that goes to building houses, which has basically stopped.