The average price of a house in Canada is now over $325,000. Canadian homes are less affordable because prices have grown faster than household income. Prices have gone up 10 percent a year between 2002 and 2007 while historically, they have gone up only 4 to 5 per cent a year. Mortgages with 40 year amortizations are now 37% of new home loans--- and 9% of outstanding mortgages.
Homes in the U.S. are a real bargain in comparism. Lets look at the positives that exist now:
- Any investment whether house, stock or mutual fund should be purchased at the time of greatest pessimism. This is another spin on the old adage: "Buy low and sell high".
- The Federal Reserve is bringing more controls into the financial and mortgage marketplaces, so that something like the subprime fiasco doesn't happen again.
- Not only has the Fed dropped interest rates by a big margin over the last year, but it has become the insurer of last resort to the U.S. banking and financial system.
- The forty year mortgage has been successful in Canada. I'm sure it will be a success in the U.S.
- With the help of the U.S. Government, financial institutions will be encouraged to give mortgages to people with good credit records.
- In a tight presidential race, the candidates will be committed to actually doing something to help homeowners and potential homeowners.
- During the last Canadian housing bubble in the 1980s, homeowners were flipping houses as fast as they could. From 1990 on, house prices declined for six years until people started buying homes to live in rather than speculate on. Since then, house prices have been doing very will indeed.
- Successful mortgage products in Canada could be applied in the U.S.
I have heard that half the buyers of Arizona property are Canadian. If you don't grab your bargain dream house soon, some rich guy is going to do it and you might end up renting from him.