Canada's Housing Bubble

Dec 23, 2009 Jeffrey CanadaBubble.com

The Canadian Dream is a belief in freedom that allows Canadian citizens and residents to achieve their goals in life through hard work. We feel a part of that Canadian Dream is to own our own home.

As working immigrants we dream of buying our own home. Like many other Canadians we view it as a sign of commitment to our new homeland and security. In the last year we watched a small group of our friends luckily buy homes. We are in a different group, the one that is still chasing the dream. We continue to look for an affordable opportunity. We are hopeful and at times frantic thinking the prices will soon be far too high and we will be left out.

In this buyers market it seems that all affordable homes have more than one offer. Offers for more than the asking price seem to be the norm and the dream of owning our own home seems further away than it did a year ago. We have not yet camped out to make an offer on a condo. We are seriously considering whether or not this is a viable option.

The ultra low interest rates make buying a home now very attractive for many. There are many more purchasers than sellers. How long these low interest rates will be available is not certain, but what is certain is that as long as the rates are low the demand for housing will be strong. The result is a dramatic increase in the price of housing in the Vancouver area. Housing prices are surging while interest rates are plunging. Housing prices that seem reasonable today are the prices that were high yesterday.

A cruel combination has seen the recession decrease personal income while at the same time the cost of homes has increased rapidly. The working class affordable home seems to be a just a dream though the low interest rate is a reality. The effects this combination of events has had is to cause a rush take advantage of low interest rates. Speculating that the price of homes will soon be even higher has created a fierce competition to purchase pushing up the home prices. Fearing prices will soon be forever high purchasers are stretching their finances to become home owners. They can afford to pay the low interest rates for mortgages as long as the rates stay low.

If the low interest rates disappear will the cost of homes decrease? We don't know. However a housing market correction in 2010 is my New Year's wish to all these who like to own their homes to fulfill their Canadian dreams.

Best wishes for a wonderful holiday season and may all your dreams come true in 2010.