Real Estate Market Not Going To Collapse
Canadian Real Estate Association addresses recession fears
The Canadian real estate market is not on the brink of collapse and is expected to have balanced conditions in 2008, and real estate agents need to get that message out.
Analysts continue to suggest the Canadian real estate market will follow the same path as the United States. Recent events including use of the word “recession” in the U.S. and record swings on the stock market, have generated media speculation about a similar downturn in the Canadian market. In February, the Canadian Real Estate Association issued a news release to try to counteract the negative press with a dose of “economic reality,” in the form of market numbers and facts.
In a letter to boards and associations, Canadian Real Estate Association President Ann Bosley said the statistics show the future of the residential real estate market in Canada is solid. “However, the problem is that the analysts views could become self-fulfilling and the greater the predictions of gloom, the greater the impact on the Canadian real estate market.” Bosley encouraged boards to get the message out to brokers in order that they may in turn share the information with clients.
In addition, the interest rate cut announced in March by the Bank of Canada will help Canadian home owners and buyers, though it is an acknowledgement that the U.S. economic slowdown was likely to be deeper and more prolonged than the Bank had projected six weeks earlier, said Canadian Real Estate Association President Ann Bosley.
“When the Bank decided to lower interest rates, the advertised five-year conventional mortgage rate stood at 7.29 per cent. This is less than one per cent above where it stood at the beginning of last year. Competition among mortgage lenders remains stiff, which continues to help many borrowers negotiate discounts from advertised rates.”
Declining interest rates and a rebound in economic growth are factored into the Canadian Real Estate Association MLS 2008 market forecast. “MLS sales activity will stay strong and reach the second highest level on record this year. Residential MLS prices are also expected to continue rising. Additional cuts to mortgage interest rates are good news for housing affordability and Canadian housing demand,” the Canadian Real Estate Association’s chief economist Gregory Klump added.
Other key players in the real estate market are painting a positive picture for the economy in 2008 with Scotia Bank expecting “balanced conditions will prevail throughout 2008, which will mark a return to a more ‘normal’ environment than the highly skewed seller’s market that we have experienced over the better part of this decade.”
The Canadian Real Estate Association maintains “domestic economy and the housing market will weather the sub-prime fallout with the help of lower interest rates,” Klump said.
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