Times are scary right now, it's virtually impossible to turn on the TV without hearing about how housing prices are dropping at an alarming rate. Unfortunately, because of the influences south of the border our housing market is suffering. Add to that the instability in the stock market and the rapid decline of the loonie, people are running scared. Let's face it, all you have to do is turn on the news right now to feel as though it's the end of the world. In the United States, the vulnerable mortgage market has led to record high foreclosures and has caused the house values to plummet. People have literally walked away from their homes and handed the keys to the bank. So why does this affect the house values? Well the answer is simple, the banks are selling off their foreclosed houses at extremely low prices to try to recover some of their financial loses. If you add to that the fact that investors are now more cautious about investing in mortgage loans, the result is that it is much more difficult to get a mortgage loan when you purchase a home. Many Canadians are hesitant right now to purchase a home in this volatile market. If you find that you are one of these people you should rest a little easier to know that Canada has one of the strongest real estate markets in the world, and one of the best systems of banking in the world. The banks in Canada have always been more conservative about their lending practices, while the banks in the US had completely opposite practices. It's quite normal in the real estate market for there to be ups and downs, in Canada in 1989, we saw one of the worst real estate crises but the market rebounded. If you asked anyone who owned a house that year it was much worse than it is right now. People signed on to mortgages at a 5% interest rate and when it came time to renew that mortgage their interest rates went up over 20% more than doubling their mortgage payments. At that time, many people lost their homes because they couldn't afford to make their payments. The point is that since that time the market has not only rebounded but has been booming, and this market is simply the cyclical slow down that is inevitable. In fact, many people would consider this a great time to purchase a home. There are so many houses for sale on the market right now it's definitely a buyer's market. You can purchase a home right now at a good price and benefit later when the market recovers, this is a great investment for first time homebuyers. More importantly, purchasing a home in this market provides a good opportunity for first time homebuyers to start building equity in a home. If you are a first time homebuyer you shouldn't expect too great a deal, it is expected that most of the price appreciation over the past few years should still remain intact in most of the eastern provinces, with the exception of major metropolitan areas like Toronto. The home prices in the western provinces however are expected to see a significant decrease in value. The point of this article is to remind Canadians that the market is always going to have its ups and its downs but no one really knows for sure what tomorrow will bring. The one certainty I can offer however is that the market will not stay the same and it's not the end of the world!
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