How’s the real estate market? It is strong and booming still.
Kitchener Waterloo real estate
Now that it is June and we are approaching mid-year, let’s have a quick look at how we are doing in terms of the local real estate market.
It’s been busy, continuing to be busy. Activity ramped up about this time last year. The volume of sales is up, as are prices.
According to our local statistics, year-to-date sales are 3.3% above the five year average. Prices are up too, especially for condos – 7.1% over last year.
Why didn’t the real estate market crash?
Ever since I’ve been a realtor, the pundits and predictors have been prognosticating a real estate crash, a correction and a dire retribution for our unwholesome real estate deeds. They’ve been wrong if course, crying wolf like a bunch of attentions seekers, over-educated data divers, and axe grinders. It didn’t crash and it is not going to. Here’s why:
Bubbles are inflated through irrational behaviour. Are Canadians irrational? No. We are stable and conservative. What is irrational about getting a cheap mortgage. What is irrational about accumulating wealth as you aren’t paying rent?
We are living in a new world. Sure we can look to history as a guide, but the game has changed. Some of our real estate inflation as well as other parts of our economy are driven by outside forces and foreign money. We can’t compare what’s happening today with the 1970’s or 80’s. There are way more moving parts to the machine today.
The rates stayed low
Interest rates continue to remain low. The economic growth data for Canada is pretty poor. That means, rates will continue to stay low, helping our export industries and our booming housing market.
Even if rates go up as eventually they should, it won’t happen overnight. The Bank of Canada and the Ministry of Finance isn’t going make any sudden moves. The worst thing they could do is send us into a recession – a much greater threat to our housing market.
They make up about 1/3 of real estate sales and they are the first link in the real estate “food chain”. The first-time homebuyers, drive demand and impact the “move-up”market. Most millennials as well as new Canadians have drank the Koolaid. They know that they have to get into the game. They have to stop paying rent if they ever want to accumulate great wealth. They have to move out of mom’s house if they are ever going to find a spouse.
The new mortgage rules
By tinkering with the CHMC, tougher lending requirements for investors, shorter mortgage amortization periods and other tweaking, the government bodies have squeezed out the risky buyers and kept the good ones.