CIBC has issued a report that will allow most Canadians to breathe a sigh of relief. With all of the real estate shenanigans that has been going on in the past few years down below the border it's comforting for a large corporation to come out and say without any hesitation that it can't be expected here in Canada.
While the global economy has been on the minds of many Canadians it's good to know that this won't send Canadian real estate reeling in the near future. There were different factors that caused the US real estate fallout and these same set of factors have not been experienced in Canada.
It's likely that Canadian house prices will fall during the next year or 2 but this does not mean that real estate is heading for any type of crash.
One of the topics that continually comes up when discussing the US real estate crash is the debt to income ratio in the states. When you compare the Canadian statistics to the US ones, our nationwide ratio for debt to income has only been going up at half that the pace seen in the US before the fall.
The other big difference between US and Canadian real estate is the quality of the mortgages offered in each country. In the United States credit scores had changed and riskier mortgages were offered. Canada has always been solid with its mortgage offerings and while many complain about the ability to get approved for a mortgage, this is one of the things that has kept real estate stable in the country through the years.
If a lender even smells the sign of risk with a mortgage up here in Canada the applicant will either be turned down for the loan or have to provide some solid information that will sway the mind of the lender. As well, with the new mortgage rules put into place this summer, it will be even more difficult for the average Canadian to get approved for a loan. This is what keeps the integrity in Canadian real estate alive since it protects individuals from taking out a loan that they really can't afford. This provides even more protection against a real estate fallout here in Canada.
Don't worry about what happened in the United States happening here. There's a different game happening in Canadian real estate and in the end it's one that most homeowners and future potential buyers will end up winning.
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