Real Estate Updates - The Highs and Lows of the Canadian Housing Market
For this week’s update on the housing market in Canada, some highs and lows are showing with obvious signs. Key players in the industry are divided in their opinions about what the market would be experiencing in the coming days and weeks.
According to an article from livabl.com, September is the month that ensured a win for Canadian housing. However, despite it being a winning month, something could still go wrong:
“Canadian home sales were up for a seventh straight month, as prices rose along with them and mortgage rates stayed low. Overall it was a decent September for the Canadian housing market that didn’t knock anyone’s socks off, but continued to look like the return to form many experts have been anticipating.”
“The September home sales and price data, released by the Canadian Real Estate Association on Tuesday, contained what has become a standard blend of recovery and persistent weakness in major markets.” - Via livabl.com
Another not so good sign in the Canadian housing market is the fast-growing emergence of what is called the reverse mortgage scams in the country. Zoocasa.com gave an account on this in their latest blog:
“A reverse mortgage is a form of financing that enables the borrower to get money from home equity without having to sell the property. A reverse mortgage is also commonly referred to as an equity release. Usually, the borrower can take out a particular percentage of the home’s current value. Borrowing maximums depend on various factors including age, property appraised value, and the lender.” - Via zoocasa.com
One of the unique features of this kind of loan is that it does not require payments until the loan is mature or due. The loan is considered due when the homeowner or
borrower decides to sell the house, move out of the property, or deceased.
The catch, however, is that the longer the qualified borrower continues without paying, the more interest is accrued. It has a negative impact on the property’s overall value when the borrower does not pay the loan on time, which means the principal and interest incurred could become so great.
According to the IMF, the real estate sector in Canada is soaring yet some markets may show the gap between the fundamentals and the prices. Overall, upon analysis of the market, the IMF showed the reasons how the Canadian real estate is overpriced:
“Today’s numbers are split into observed aggregates, and “attainable” prices. The observed aggregate is a fancy way of saying indexed or benchmark. It’s an index of home prices, not unlike the Teranet-National Bank HPI, or CREA benchmark. It’s the price of a typical home in each respective market. These are based on the prices paid in each quarter.” - Via betterdwelling.com
The A-Team will bring you more updates, good or bad, in the Canadian housing market so stay tuned for our next news roundup.