After many years of a bull run in the Canadian housing market, homeowners should expect 2013 to be a much more moderate one when it comes to prices. In its Annual Review of the State of Housing in Canada, the Canadian Mortgage and Housing Corporation (CMHC) credits the Canadian mortgage market moderation to the new mortgage rules. Housing prices may not rise this year as they have for more than a decade, but the overall financials of Canadians are looking much better moving into the new year.
Here’s how homeowners stand going into 2013:
Canadians are Financially Fit
The review finds Canadian are financially fit heading into 2013. Fewer homeowners are behind on their mortgage, the rate of Canadian residential mortgages that were three months or more in arrears declined from 0.41 per cent in 2011 to 0.36 per cent in the first half of 2012.
Canadians are Richer (Really!)
The net worth of Canadian households increased in 2011, with inflation-adjusted per capita net worth about $7,000 higher than prior to the recession. This means more Canadians are paying down their debt and borrowing more responsibly.
More Construction and Renovation Underway
Canadians love to update their homes and this year was no different as renovation spending in Canada grew three per cent in 2011 to $43.8 billion. For those looking into move into something brand new there are more options as well, Housing starts in Canada rose 2.1 per cent in 2011 and were above the long-term average at 194,000 units. This is expected to continue into 2013.
Home Prices are Safe
Since the financial crisis in 2008 that collapsed the U.S. real estate market, speculation has pointed to a correction coming our way as well. That has yet to happen. I think the moderation in prices we are seeing now IS the only correction we will see. When interest rates rise, home prices are bound to soften, but not at the accelerated rate that some economists had predicted before.
Homes Sales To Be Flat This Year
The RE/MAX Housing Market Outlook 2013 examines trends and developments in 26 major markets across the country. It expects the value of houses nationally this year to be flat compared to last year. This can be seen as a relief to homeowners, economist only two years ago were expecting the Canadian housing market, particularly the condo market, to plummet by 20 per cent.
Thinking of Buying?
If you are looking to buy you may benefit by waiting until after the busy spring season, when most real estate transactions take place. If prices remain flat over the year, buyers may be in a better position to negotiate with homeowners who are eager to sell their homes that have been on the market for an extended period of time.