As per RBC, fears of a Canadian housing market crash overblown. You may have noticed a lot of stories in the press recently about a significant risk of a collapse in housing values.  These concerns are based on the belief that the increase in house prices we’ve seen in the past several years have created a housing bubble. To better understand current housing market trends, RBC have looked back at the level of housing affordability that prevailed in the late 1980’s and early 1990 when a real estate bubble caused the Canadian housing market to meltdown in the years that followed. While it is true that housing affordability has deteriorated in recent quarters, it remains much better than it was in 1990.

RBC believes that the modest erosion in affordability will cool the housing market but will not create a deep freeze effect.  Home prices overall are expected to maintain their values nationally, though some local areas with very poor housing affordability, such as Vancouver and Montreal could experience declines in home values.

What does all that mean for home buyers?

Now more than ever it is important for home buyers to get the right advice from knowledgeable real estate professionals. By understanding market trends in their area potential home buyers will be able to make informed decisions about value for money.

Housing Trends and Affordability summary

September 2010

Homeownership costs continue to climb in Canada. Affordability levels are still generally well below past extremes, although there are local exceptions. RBC projects the overnight rate will continue to rise during the next 12 to 18 months, and this will eventually have a more sustained upward effect on mortgage rates, undermining affordability. An expected flattening of home prices and rising household income will partly mitigate the detrimental effect.

Ontario and Toronto housing

After setting new record-high marks this winter, home resales in the province have since fallen precipitously. The slowdown in activity largely reflected various transitory factors – the HST, changes in mortgage lending rules and the rush of first-time home buyers to lock in low mortgage rates – that brought demand forward earlier this year. RBC housing affordability measures increased for a fourth consecutive time, representing some of the bigger rises among the provinces.

Home prices in Toronto have thus largely resisted any emerging negative forces, although slight declines have been noted in some market segments (e.g., condominiums). The deteriorating trend in Toronto’s housing affordability continued in the second quarter, with RBC Housing Affordability Measures climbing to levels that now exceed long-term averages.

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Local Data Matters. For all your local real estate needs work with your local professional!

Before you look at average data or housing reports, it is prudent to consult with your local real estate professional for detailed analysis of neighbourhoods and prices on your street or condominium. Real estate market reports and housing data across Canada can be too overwhelming when considering local real estate buying, selling or investing. 

Local real estate information can include market trends, demography, neighbourhoods, rental markets, infrastructure development, schools, proximity to transit, area amenities, demand and supply, crime rates, age of property, salient features, prices on a specific street or a condo building, builder reputation etc. 

Local real estate knowledge is crucial to your success in real estate. Feel free to consult with me, your local real estate professional, if you are looking to buy, sell, invest or rent a home or a condo in Mississauga.