Tuesday, November 9, 2010
Bank of Canada Says...
The last couple of days I've been getting a lot of updates about the slowdown of the housing market and interest rates. I read the Toronto Star every morning and I have done so for years. My my hubbie got me into it. Guess what I saw, big headlines about "NO BUBBLE BREWING" by Tony Wong. The article goes on to explain why - Canadians have binged on low interest rates, pushing up prices to levels that are now moderately overvalued. Average housing prices are about 11% overvalued, but the market is not experiencing a bubble and is unlikely to suffer a US style collapse. After doubling in the past decade, prices are now adjusting lower in response to less demand and higher household debt."
I was very glad to hear this. I have been seeing extremely low inventory numbers in the past few weeks. My buyers are asking about listings. Some sell quickly, some sit on the market for a longer period of time.
Now, I would like to share Kristian Harris' article from the Globe and Mail. Also very interesting. Enjoy the read:
Carney Remains Positive About Housing
Bank of Canada Governor Mark Carney is still concerned that home prices could
drop more sharply than expected and exacerbate the growing debt burden of many
households –but he doesn’t see it as very likely.
Speaking to the House of Commons finance committee Tuesday, Mr. Carney said the
slowdown in housing is unfolding as the central bank expected it would, given the
tighter mortgage rules brought in by the Finance Department earlier this year and the
fact more Canadians are retrenching after spending and borrowing with abandon amid
record-low interest rates.
Still, he warned, a quicker, less measured drop is a possibility. Should that happen, it would almost certainly mean Canada would see slower economic growth than Mr. Carney’s latest forecasts, which included downgrades for five consecutive quarters.
“One of the important downside risks to our projection is the possibility that there is a more abrupt correction in the housing market than we’re anticipating,” Mr. Carney told lawmakers at the panel hearing in Ottawa. “We’re not forecasting an abrupt correction, but it is a possibility, given two factors: the speed with which house prices rose and, secondly, the absolute weight of debt in the economy that is tied to housing.”
The Bank of Canada’s benchmark interest rate could remain at the current 1 per cent
for several months, as policy makers wait for the crucial U.S. economy to start
improving before raising borrowing costs on this side of the border.
Raising Canadian rates while the U.S. Federal Reserve is still on hold could send
investors who want higher yields to currencies like the loonie, making life harder for exporters.
Mr. Carney told the parliamentary panel that if sudden moves in Canada’s exchange
rate with the U.S. dollar or ``persistent strength’ ’in the loonie got to the point that they posed a serious risk to the economy, he and the federal government ``maintain considerable options’ ’to get the situation under control ``if that is necessary.”
Source: Globe and Mail
Now you have a choice. Two opinions from 2 separate sources. Thank you Kristian Harris, Monster Mortgage for keeping me abreast with news about the housing market. If you have any questions or would like to discuss your most precious investment, give me a call directly at 416 427 1875.
Betty Bartusevicius, Sales Representative
Re/Max Realty Specialists Inc., Brokerage
OFFICE: 905 828 3434
DIRECTLY: 416 427 1875
WEB SITE: bettybart.com
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