Is real estate bubble ready to burst? Alarmingly surging average prices of home in Vancouver and Toronto are not good signs for real estate market in Canada and they are dangerous for the whole nation.
Average cost of home in Vancouver is around 1.5 million and for Toronto stats shows it’s around 1.3 million dollars. Two years ago average selling price for home in Toronto was around 1 million.
Canada’s big bank’s now seems to be worried about the situation, as earlier same were disbursing loans at a great speed. Skyrocketing home prices anywhere in the world are considered to be bad sign for real estate as they generally end up with worse conditions.
Banks are now not willing to sell new mortgages , not for at least next few months , until the situation becomes little bit more clear.
Banks on the one side are not willing to loose volume of business, but on the same time are bit hesitating to lend in the Vancouver market. However they are getting various inputs from economist and other experts to bring the situation under control. One of them being , raising down-payment minimums for borrowers who require insurance from the Canada’s Mortgage. Down-payment of 10% on the portion of the purchase price in excess of $500,000 , as on February this year.
One more option is raising qualifying interest rates for 5 years fixed mortgages. ‘Temporary luxury tax’ on foreign investors is one of good option to cool the Ottawa market.
Finally there is no specific way to cool down sizzling housing markets of Vancouver and Toronto, but higher authorities are watching and taking all precautions and possible steps to keep the situation under control.
Let’s hope we have corrections in the most suitable way that will bring win win situation for all.