It's no secret that the Canadian real estate has been in a steady decline since the latter part of 2008. Canada's economic downturn was led, in part, by the United States' record foreclosure rates as borrowers defaulted on their mortgages.
The general slowdown of the economy has somewhat scared away the largest category of buyers in the real estate market - first time homebuyers. In early 2009, home sales and property values continue to decline. In fact, house prices are forecasted to fall by another 10 to 20 percent. Many Canadians are realizing the opportunity created by lower home prices and lower mortgage rates.
A Buyer's Market
The days of bidding wars are decidedly over - at least for now. The decrease in real estate prices has greatly improved affordability, making it more likely for buyers to find what they are looking for at more affordable prices. Simply put, the lower prices of homes on the market are giving buyers more bang for their buck. The softening of prices isn't the only factor contributing to a buyers' market in Canadian real estate; the increase in listings and availability of homes is giving homebuyers more choice.
The anticipated impact of a stimulus package both in Canada and in the United States also contributes to a more favorable buyers' market. Economic recovery will lead to a turnaround of the housing market as well. Most sector groups predict that the Canadian real estate market will rebound in 2010 as the general economy turns around. This creates further opportunity for Canadians to do well on any given real estate deal. Buyers could reasonably expect to purchase a home at record low rates this year and see a substantial increase in the value of that home over the next few years.
Because of more favorable conditions created by lower prices on homes and more available options, a growing number of Canadians claim they plan to buy a home over the next two years. An online poll by Ipsos Reid earlier this year found that 65 percent believe it is a buyers' market now. About one third of those polled who intend to buy a home over the next two years cited favorable housing prices as their main motivation.
Miniscule Mortgage Rates
Mortgage rates in Canada are the lowest they have been for almost 20 years. At 5.5 percent or lower, mortgage rates are more than 15 points under their 30-year peak, which was 21.8% in 1981. Variable rate mortgages are currently carrying interest rates as low as 3.3%. Some are even able to negotiate a lower interest rate than the one posted.
This greater affordability of mortgages is further contributing to Canada's "buyers' market." Though the credit crunch has not necessarily forced mortgage lenders to revise their lending criteria, it has brought about stricter application of existing guidelines. While the stricter scrutiny of mortgage applicants has made it more difficult to approve "grey-area" borrowers, it has made creditworthy mortgage seekers a hot commodity. People with stable income, exceptional credit and/or substantial assets (collateral material) are being courted by competing mortgage lending institutions.
A Word of Advice
Though it may seem like the perfect time to take advantage of Canada's current "buyers' market," there are many factors to consider that may not have existed in previous eras. If you're thinking about purchasing a home, consider the following:
* Security of your career and/or job
* Sum of cash for substantial down payment
* Cash reserves for resulting expenses
* Maintaining balance of liquidity
If after considering these and other factors, you determine that you're a good candidate to buy - you may end up with a great deal.
Author Resource:-
Canadian Mortgage rates site offers mortgage comparisons in Canada from banks, mortgage brokers and other lenders. When doing research for a mortgage in Canada, use our mortgage calculator Canada.
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