The low interest rates that have been implimented to ward off the recession in Canada and especially the United States may have set off a mini housing bubble.
Canada’s real estate market has not suffered as much as the United States market has. But with the economic turmoil of it’s southern neighbor, they have been able to benefit from the low interest rates and as such has seen housing prices skyrocket.
Let’s hope they have a better outcome than we have to the south.
“It is premature to talk about a bubble in Canadian housing markets,” Wolf said today in Edmonton, Alberta. “If the Bank were to raise interest rates to cool the housing market now – when inflation is expected to remain below target for the next year and a half – we would, in essence, be dousing the entire Canadian economy with cold water, just as it emerges from recession.”
The lowest mortgage rates since the Korean War helped fuel a 67 percent jump in existing home sales in November from their January low, with the average price up 19 percent from a year earlier to C$337,231 ($326,600). The Bank of Canada cut its benchmark lending rate to 0.25 percent in April and has committed to keeping it there through June unless the inflation outlook shifts to aid a recovery. via Bloomberg
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{ 2 comments… read them below or add one }
It’s simple…a real estate market is sustained by the economic fundamentals it is in. So it is dependent on jobs, growth, immigration to the region,higher wages etc.Canada has a very strong economy and I believe will be a world leader for many years. Canada didn’t have a single bank failure in the recent worldwide economic collapse. That is very impressive!
True…I agree with Manny.