Florida Reo Asset Management
Florida Reo Asset Management
Interview # 14 – Cash Flow in Miami DANNY GONZALEZ EVERLASTING FOUNDATION INVESTOR-REALTOR
The numbers clearly indicate that last year was a great success for the Canadian real estate market. Sales rose more than 520 000 units, 7.6 percent of 2006 levels. This was the largest growth since 2002. Transactions through the MLS systems have reached more than 500,000 units sold. The average real selling price of goods rose by 14.1% to $ 317,825 in December 2007 compared to December 2006
However, in 2008 opened a series Question. Not only was the real U.S. market the housing bubble, but also the problems of oil and food prices that many people believe the recession is knocking at the back door again.
Canadian economy has slowed down a bit at the end of 2007 and GDP growth for Q1 2008 was negative: -0.1 percent. Reasons? Export level is guilt on my part. Due to problems in the major partner in Canada, USA and the U.S. dollar weak, exports fell. Rising commodity prices are not really bad for Canada. The costs of fossil fuels are increasing, which is why more and more nuclear power stations being built in the world. And Canada is a global supplier of uranium higher, covering 25% of the world's needs.
The world's largest economy and our nearest neighbor and most important is America. Canada wants to know if we can experience the same problems of real estate as our neighbor.
But who is to blame for the housing crisis in America?
After the dotcom bubble and 9 / 11 events, Fed interest rate slowed to 1% and real estate began to grow. It was very easy to get subprime mortgages. Properties were overvalued and the bubble bursted – everyone knows the story. Is this what the future holds for Canada, too?
Well, not exactly.
Subprime Mortgages are the biggest difference. In general, you can define as home mortgages offered when buyers do not meet the banks, the first customer profile mortgage. While covering about 20% in the U.S., Canadian mortgages appear to be much more conservative on this issue – similar to create about 5% of the market. The Canadian credit policies are stricter than the U.S.. The most dangerous are "teaser" mortgages that offer low initial rates, then
later reset at a higher level, or mortgages to individuals with a minimum deposit and no coverage contributed to the crisis substantially. These products are not are common in Canada, however, new ones have emerged recently in the Canadian market and the segment of subprime mortgages are expected to double over the next five years.
Lower the number of sales and new listings increased recently been evident. The question is, if it's just simple trend correction, or an air bubble to lose more and faster.
The predictions of the experts remain optimistic. Rosales is expected to fall, but still represents remain above 465,000 in each of the next two years. Decreased new starts are also expected, but an even above average past years.
Interest rates should not change substantially. A cut of 3.0% was expected in June and may be still possible in the near future. On the other hand, other crises of commodity prices can increase inflation and therefore interest rates in the future, making mortgages more faces.
Net migration is believed to maintain high level of around 200,000 people. People who go to search for homes on the market! On the other hand, the birth rate in Canada is decreasing, potentially reducing future demand for housing.
Baby boomers' baby boomers first since the period 1947-1966 will retire. The question is whether they will seek recreation property in Canada, or sell your home and move to Costa Rica? "
Energy Prices: probably influence the structure of demand in the future. Houses large energy consumers in distant neighborhoods will driven by the modern inner city condominiums.
Everyone must make their own conclusion on the basis of the above events. Canadian real estate now is slowing and the market is going to be strictly balanced driven to one seller, with more affordable housing. However, the acquisition of real estate is still a good investment, an increase of the price to beat inflation.
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