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Canada’s Housing Market- Ready to implode!

Despite what the mortgage companies and loan-sharks tell you: All’s NOT hunky-dory with the Canadian real estate scene. Even the government, at all levels – Federal, Provincial, Municipal – are trying desperately to put on a brave face on the impending market correction. However, the numbers never lie.

Here’s why many analysts believe that Canada is heading for a housing bubble crash that could be much bigger than what our neighbours to the South experienced in 2008-09!

Facts and figures

When Royal Bank of Canada (RBC) pushed out its Housing Affordability indicators for Q4-2017 a short while ago, it indicated that there was some improvement in the average Canadian’s ability to afford a home. This was the first good news in over two years. RBC’s Canada-wide affordability indicator stood at 48.3% in Q4 2017, compared to an average of 39.4% since 1985.

So, what do these facts and figures mean? Well, in simple terms: Higher is bad. Lower is good!

48.3% means that, for the average Canadian household, 48.3% of their household budget will be consumed on home ownership spending. That includes utilities, property taxes (not to mention HST/GST and other taxes) and yes – especially mortgages! Back in 1985, only 39.4% of a household’s income went towards affording a home. To put things in perspective then, Canadian’s spend 48.3 cents, on the average, out of every dollar they earn on housing affordability.

Posing a rhetorical question: “Are we at a turning point for affordability?”, the RBC report offers us this gloomy outlook for Canada’s real estate market:

“No… Rising interest rates will put upward pressure on home ownership costs, and recent policy measures are more likely to reduce household and market risks than provide material affordability relief”

…click on the above link to read the rest of the article…

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