Below is a Real Estate article collection by Team 3000 for your reading pleasure:
The following article was published by DEREK DeCLOET in The Globe And Mail's Report on Business dated, August 26, 2011.
Jumbo government mortgage assistance programs helped inflate, then burst, the U.S. real estate bubble. Have you looked at the Canada Mortgage and Housing Corp. lately?
Is there a bubble in real estate? Canadians have been arguing about this for years. We'll keep arguing, because asset bubbles are hard to identify until they've deflated, and this one hasn't. Besides, it depends on which of Canada's many real estate markets you're looking at. In Saint John, New Brunswick, where a detached home can be had for a monthly payment of $750, or Calgary, where prices have levelled off and the typical house sits on the market for six weeks, there's no sign of trouble. But if you're in Vancouver and must sign up for 25 years of financial servitude for the privilege of owning a small glass box in the sky, prices look very dangerous indeed.
So the bubble question is complicated, but a few points are not in dispute. On average, owning a home is now more expensive, compared to renting, than it has been in generations. Prices are growing faster than incomes; in Vancouver, the mortgage payments on an average home would consume more than half of the typical household's wages, says TD Bank's economics department. Buyers respond to high prices by borrowing heaps of money. Three years ago, just one out of every nine mortgage-holders borrowed more than 80% of the value of their homes. Today, it's one in six.
Read the full article.
Note the comments by the author:
"The Great Canadian Home-Price Inflation couldn't have occurred without CMHC. In just six years, its insurance business has doubled, and it now backs more than $500 billion worth of mortgages. Most of these are fine. But about $45 billion is with the riskiest group - buyers with less than 10% equity. These people could be wiped out if there's a sharp correction".
CMHC is backing the banks to provide financing to home owners with little equity in their homes. Let's just hope and cross our fingures that the Canadian economy stays strong and there won't be a market crash.
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