Real Estate Market Speculations

Real Estate market newsHere’s a quick note about what’s currently going on in the Canadian Real Estate market.

At this point in time, there is a great deal of opinion and speculation about where the real estate market is headed going forward. Many articles written in the financial press suggest that market prices are overextended and due for a correction, after a number of years of increases. This argument is primarily based on the fact that interest rates have been historically low and have allowed more buyers to enter the market along with lower mortgage payments.

This has led to additional demand at all levels and prices have moved steadily upward as a result. However, the Bank of Canada is concerned about the onset of inflation in general, and is advocating higher interest rates in order to counterbalance inflation and keep the economy as even as possible.  As interest rates rise and mortgage renewals become due, the monthly payments go up.

Since many homeowners have higher debt levels than what is considered normal, this could mean trouble servicing this debt and thus have a dampening effect on market prices!