(PRWEB) September 04, 2014
Canadalend.com, the leading low-cost private mortgage solution provider in Canada, is responding to a recent report suggesting Canada’s housing market is among the most overvalued in the world and bears an uncanny resemblance to the situation that prevailed in the United States just before the financial crisis in 2008.
According to data compiled by The Economist magazine, the Canadian housing market is at least 25% overvalued in nine of the 23 economies it tracked. The study compared the relationship between the cost of buying and renting by using price-to-rent and price-to-income ratios. Canada, along with Hong Kong and New Zealand, were cited as the most glaring examples of overheated markets. These economies also bear an uncanny similarity to the situation that prevailed in the U.S. at the height of its boom before the financial crisis. (Source: “Location, location, location,” The Economist web site, August 29, 2014; http://www.economist.com/blogs/dailychart/2011/11/global-house-prices.)
“This most recent data is an update to a report The Economist released this time last year, when it said the Canadian housing market was poised for a crash,” says Bob Aggarwal, president of Canadalend.com. “Instead, over the course of the last year, the Canadian housing market has proven to be quite resilient.”
Aggarwal observes that while Canada certainly isn’t immune to a U.S.-style housing crash, under the current scenario, it remains robust and the short-term outlook is solid. According to the most recent data, July national home prices were up 1.1% month-over-month, 4.1% year-to-date, and 4.9% year-over-year, with housing prices climbing the most in Calgary, Hamilton, and Toronto. For 2014, it is expected that the average Canadian MLS price gain will be 4.5% at $399,800, with a further 1.8% gain in 2015 to $406,800. (Source: “Teranet - National Bank National Composite House Price Index July 2014,” HousePriceIndex.ca, August 13, 2014; http://www.housepriceindex.ca/Default.aspx.)
“Framing the entire Canadian real estate market with the price-to-rent ratio and price-to-income ratios is too simplistic and fails to take into consideration a drop in interest rates and tighter lending rules, factors that were lacking in the U.S.,” Aggarwal concludes. “As we head into the traditionally strong autumn buying season, now is the perfect time to call the licensed, independent mortgage experts at Canadalend.com.”
Canadalend.com is one of the largest, most trusted private mortgage brokers in Canada, with skilled independent, licensed professionals helping Canadians coast-to-coast. Canadalend.com provides its clients with residential and commercial mortgages, home equity credit, debt consolidation, and help with addressing financing concerns. To learn more about Canadalend.com, visit the web site at http://www.Canadalend.com.