Something’s Gotta Give - Real Estate in Canada

Something's gotta give. The combination of sky-high real estate prices and high interest rates is unsustainable.

In March of 2022 the Bank of Canada started raising interest rates in an effort to combat inflation. We can point fingers as to how we got into this situation, but it is probably a combination of ultra-low interest rates in the preceding years, coupled with the massive printing of money by governments around the world when the Covid-19 pandemic hit.

The fact is, real estate prices in Canada have been on a tear since 1996. We managed to avoid the big crash that the U.S. experienced in 2008. Despite numerous efforts by the federal, provincial and various municipal governments to slow the market, prices just kept on rising.

Toronto and Vancouver were the most affected, although almost every city and town across the country saw sizeable gains. People were making money through real estate. Good times.

Once interest rates started going up, those high prices became a liability. For someone buying a million dollar home, even a single interest rate increase can cause substantial stress on monthly overhead. Anyone who has to renew their existing mortgage, has to do so at a higher rate.

So far, we have had 10 interest rate increases in 17 months.

We are at a point where almost no-one can afford to buy a house in Canada. Even a starter condo is out of the question for many first time buyers.

There is a shortage of listngs, partly because no-one can afford to move. And the cost to rent has also gone through the roof. So something has to give.

Either rates have to come down, or real estate prices will.

We have been buffered at bit by the extremely high number of immigrants being admitted into the country, but even that is a misguided policy choice. Immigrants are great for a country like Canada, but when there is nowhere for them to live, that only makes the problem worse.

Denise and I talk about all these issues, and more in today's episode. We welcome your comments.

#realestate #canada #mortgage

You can reach Denise Pisani at https://mortgageinthecity.ca/

phone: 416-629-5363

Randy Selzer - Real Estate Agent 33 Pearl St Mississauga, ON L5M 1X1 416-433-3556

https://www.randyselzer.com/

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