RE/MAX CEO Margaret Kelly appeared on CNBC’s Street Signs on March 14, 2012 to discuss the RE/MAX National Housing Report, which found that for the first time in 18 months, home prices rose year-over-year in February. This is first time such high positive numbers are seen across the border. Question is will this effect us in Canada?
Canadian Economy currently have high unemployment rate, which was majorly due to economy downturn which started back in 2008 in USA and hitted majority of Canadian exporters. We supply across the border along with many other things, lots of building materials like base metals, wood, asphalt shingles, carpets, flooring and the list goes on and on. With improvement in consumer confidence across the border, builders will get back in action which will reopen this export avenue, which was getting effected by this depression. This will further lead to two things in Canada:
1. Increase in Employment Rate
2. Increase in GDP
Once both above happen….it will lead to increase in Bank of Canada’s key lending rates to Retail banks i.e. leading to increase in lending rates which current consumer is enjoying. This is still not expected to bring the real estate market down, as when employment rates goes up…..real estate is not expected to comes down in any economy. Where it will effect will be what you can afford to buy i.e. If today if your bank is approving you with $500,000 mortgage, the situation may not be the same tomorrow….you may qualify for lesser amounts, specially for high ratio mortgages. All leading to compromise somewhere in what you want to buy.
NOW is the time….if you were at all thinking of buying this year….you shall re-evaluate your situation and look into the possiblity of securing your dream home faster.