I've been getting a lot of questions about the state of our housing market, and the potential ripple-effect coming from south of our border. There are some frightening things happening there (consider the recent $700B bailout proposal of the financial sector), that we are insulated against, as a result of tighter lending practices and more control over the sub-prime market. While close to 35% of loans in the US are in the sub-prime market, in Canada it's only 5%. It is estimated that in the US there is a 12 month supply of new homes on the market at the moment.
Fortunately there are steps being taken to avoid a similar situation as what's happened in the US and now in the UK, as I touched on in my September newsletter. 100% financing will no longer be available beyond the middle of October, and purchasers must have a 5% downpayment for a home. It has been shown, that lowering the downpayment requirement from 10% to 5%, will double the likelihood of a default on a house. Just how much incentive do you think there is, for someone to continue to make payments on a home that is 100% financed?
I'd love to hear your thoughts on this, shoot me an email at firstname.lastname@example.org
Buying and Selling Residential, Condominium and Investment real estate in the Waterloo Region since 2008. Oh, and also Ottawa! :-D