Canadian Real Estate Guide.

It’s been said that it’s different in Canada. The fear that perhaps the downtrend in the global real estate industry will seep into the Canadian market is not likely to pan out. While its neighbor down south is still suffering from the collapse of its real estate market, Canada’s real estate outlook remains positive. Many factors support this.

* Canadian regulators implement stricter loan terms, and low ratio mortgages are insured. Thus, the US real estate situation is not likely to affect Canadian markets.

Lending policies, as implemented by Canadian regulators, are set up differently and are inherently more restrictive. Likewise, mortgage insurance reserve is at a high 4 billion dollars. This is an optimal level considering the 2 billion dollars in claims paid out during Canada’s recession in the 90s. While global or US real estate market plunges may affect Canada, it is highly possible that these effects will be buffered by sturdy industry regulations.

* A lower percentage of income is allotted for mortgage payments, as compared with previous mortgage allotments.

In the 90s, homeowners doled out about 40% of their total household income for mortgage payments. Today, only 27% of total household income goes to mortgage payments.

* The price increase in the Canadian real estate market is historically not high, especially when compared against other major international real estate markets.

Home price increases in Canada is at 80% since the mid-90s. This is loose change compared with the global skyrocketing price increases of 165% in the US, 210% in Britain, and 159% in Australia. Many other major world markets have experienced triple digit percentage increases. Analysts credit the Canadian regulators’ limitation of the number of products in the mortgage insurance market to the seeming cap in home price increases.

* The homebuyer market in Canada is increasing, and there are now more affordable amortization options.

Canada enjoys a steady stream of immigrants, and these new entrants have been recognized as a major driving force in the homebuyer market boom. With the newly instituted amortization options (40 years amortization, at the most) and the new no-downpayment mortgages, a lot more people are out to buy homes.