As the global housing recovery continues to gather momentum according to the Global Real Estate Trends which was released by one of Canada’s largest banks, the Bank of Nova Scotia.
Right now global housing recovery is being nourished by exceptionally low borrowing costs, direct government purchase incentives and improving confidence in the fledging economic recovery and any residential real estate in major developed nations firming up in the third quarter of 2009.
Now Canada is doing exceptionally well, which leads the markets that Scotiabank tracks.
We saw the early slump in Canada’s housing market wrap up early and we had a surprisingly strong year in 2009.
Now we have seen much news concerning the increase in Canadian home prices, which brings worry of a housing bubble, however if we examine the recent home price increases, it is primarily due to fundamental demand supply factors.
When the ratio of home sales to new listings move above 50, it is considered a seller’s market, and selling prices rise faster than inflation.
The larger the imbalance between the number of potential buyers and willing sellers, will give a larger than average price gain.
The housing demand in Canada is expected to remain strong, through the spring sale season as buyers attempt to use the extremely low interest rates to their advantage and as improving labour markets increase confidence.
It is expected that reduced affordability, through the combination of higher home prices and borrowing costs will eventually cool demand, however this is not expected until much later in 2010.
On the other hand, if home prices continue to climb, there is the risk of an eventual price correction, however this topic is for another day.
With the information we have, if you are a buyer in the current housing market, you should be prepared to see more inventory and the possibility of prices stabilizing, or event going up further. You should not expect to see prices decline especially if you consider the low interest rates are being held until the middle of 2010, and the improving confidence in the labour market being seen every month.
Take your time when purchasing a house, because you are committing yourself to a large investment, one of the biggest you will make in your life. Taking the necessary precautions will allow you to make an informed decision and will ultimately allow you to have the home of your dreams.
Matt Goulart is the Founder and Lead Consultant with Webstar Content. Matt can be reached at firstname.lastname@example.org or via their website at www.webstarcontent.com.