With today’s update on the changes to mortgages for homeowners this is plenty of questions forming about what is happening in the Real Estate markets. Is the current situation the start of a bubble? Are we getting into danger where housing prices will reset again?
What we all have to remember is there is no right answer to this. Canada is a very large country and the market in Vancouver is entirely different than the markets in Hamilton or Windsor. Unfortunately the headlines cover the averages or the markets in the larger centers such as Toronto, or Vancouver.
These averages tend to be exaggerated by the size of the larger markets as well so when Toronto increases it weighs much more in the stats than when Windsor prices decrease. As an investor, or a homeowner, you have to consider where you are in the country and what is happening in your area over the next five years.
Real Estate is a longer term play and this is why it can be so important to pick an area with a better long term outlook like Alberta. Below is a great interview wih Don Campbell talking about the “housing bubble”.
One great point he makes are about the amount of five year mortgages that have been signed over the last six months and how these folks will be protected by any interest rate hikes coming in the near future, at least for now!
Here is the link, enjoy, Don Campbell BNNÂ Interview about the Housing Bubble in Canada
Bill, what is Don C currently recommending to investors? Lock in or continue to float?
Hi Vaughn,
Don;s usual answer is to find what suits you. Variable rates are currently a much better choice if you understand in two years there is potential for them to be equal to or higher than current fixed rates. If that could make things tougher on your business in two years, then a fixed rate will allow you to sleep better at night.
Realistically variable will most likely still be less in two years than a fixed rate, but is it a bet you want to make?