INVESTING IN REAL ESTATE

Investing in Real Estate

Investing in Real Estate

Property prices and sales in Canada are soaring creating fears about a property bubble with surge most pronounced in Vancouver and Toronto. Sales of existing properties in Canada were up 73% in November compared to last year's level, figures from the Canadian Real Estate Association show. A total of 36,383 residential properties traded hands, only 0.4% off of the all time high for November and setting new monthly sales records for Ontario and Quebec.

The national average price gained 19% compared to November 2008 and the average price rose 4.4 % compared to the same period last year. Prices though have risen more in the main markets, up 20% year on year. Bank of Montreal economist Doug Porter said that the only thing preventing a real estate bubble was the fact that average figures are affected by soaring prices in the main cities such as Vancouver and Toronto. He added though that because property sales were extraordinarily weak at the end of last year and the beginning of 2009 prices will soar. (Zine 2008)

'We are on the bubble of a bubble. We could see a bit of a buying frenzy this spring followed by a pop in 2011. This will be but the first in a string of China style gains for Canadian home sales and prices, ' he said, likening the situation to that in China where the government is now taking measures to cool the country's real estate market.

Anxious Canadians have waited to see how our government would tackle a monstrous world economic crisis and its spill-over effects into Canada.  It was a year ago, in January 2008, that some economists optimistically announced Canada would experience some pain however we would be immune to any kind of recession here.   As the mouse slept beside the elephant, the elephant did roll over and we were also smothered by its weight.

It was in the last quarter of 2008, that the story changed.  The housing market continued to slow down, vehicle sales fell and Canadian exports to the USA dropped.   Many Canadian companies began to see a decline in their own business and forced many to downsize.  As companies began to cut back on their workforce, the overall job losses in Canada have continued to climb.   It is estimated that Canada will lose approximately 170,000 jobs, this year alone. (Wilson 2005)

Canada is most certainly in a recession and desperately awaits an injection of hope.  In response to this economic crisis, Canadians must now place their faith in the new federal budget which was tabled in the House of Commons, by the Honourable Jim Flaherty, Minister of Finance on January 27, 2009.  

Recognizing that the Canadian housing industry is a significant contributor to our economy and its growth and stability, a swift move to stimulate the housing industry was critical.  Canada's housing industry has experienced a drop in new building permits, housing starts, and a decline in housing sales and home prices.  Along with the slow-down has come stricter lending and financing guidelines which have also ...