{"id":5272,"date":"2021-07-06T11:09:30","date_gmt":"2021-07-06T18:09:30","guid":{"rendered":"https:\/\/wiibid.com\/?p=5272"},"modified":"2021-07-08T12:32:41","modified_gmt":"2021-07-08T19:32:41","slug":"canadian-housing-market-bubbles-up-resulting-in-future-high-interest-rates","status":"publish","type":"post","link":"https:\/\/wiibid.com\/?p=5272","title":{"rendered":"Canada’s “Bubbly” Housing Market Could Be Risky for Homebuyers"},"content":{"rendered":"
<\/div>\n
Canada\u2019s real-estate market has entered a bubble with two new reports, reinforcing fears among housing experts who believe that the housing market is becoming further detached from the fundamentals. Bloomberg<\/a>, the global news and data firm, generated a \u201cBubble Ranking<\/a>\u201d, consisting of country scores based on home buying and real-estate factors: costs of buying a home compared to renting, the price-to-income ratio, inflation-adjusted price growth, nominal price growth, and the annual rate of household credit growth. Bloomberg ranked<\/a> Canada as second bubbliest housing market on the planet, with Sweden, Norway, and United Kingdom tailing behind and New Zealand taking first place.<\/div>\n
\n

\u201cA cocktail of ingredients is sending house prices to unprecedented levels worldwide,\u201d Bloomberg economist Niraj Shah reports<\/a>. \u201cRecord low interest rates, unparalleled fiscal stimulus, lockdown savings ready to be used as deposits, limited housing stock, and expectations of a robust recovery in the global economy are all contributing.\u201d<\/p>\n

 <\/p>\n

\"\"Source: OECD, Bloomberg<\/p>\n

 <\/p>\n

In addition, a former Bank of Canada economist published research suggesting that housing in Toronto and Ottawa is overvalued based on historical metrics, with Montreal becoming increasingly so. The rising heat in the eastern cities, combined with Vancouver\u2019s elevated prices is turning the national numbers frothy. Since these places are home to more than 50% of Canadians, the Bank of Canada will be forced to potentially increase interest rates slowly and carefully.<\/p>\n

\u201cThe housing market will probably be the first casualty of higher rates,\u201d says Alberta Central chief economist Charles St-Arnaud\u2019s, who previously worked at the Bank of Canada. \u201cWhen rates go up, that affordability will disappear very, very quickly.\u201d<\/p>\n

Changes in interest rates could generate significant headwinds in the housing markets of major cities, causing struggle among large numbers of people who are trying to keep up with the high prices. Yet the risk is greater when there\u2019s a synchronized boom in house prices \u2014 as is the case in the current cycle, according to Shah. \u201cWhen borrowing costs do start to rise, real estate markets \u2014 and broader measures put in place to safeguard financial stability \u2014 will face a critical test,\u201d Shah wrote. A simple 10 per-cent jump in prices in major cities, paired with a 1.5-percentage-point increase in borrowing costs, would make those markets heavily overvalued.<\/p>\n

Bank of Canada Governor Tiff Macklem is being warned that when raising interest rates, as he has said he could do next year, he will have to be mindful of the ripple effect that the policy change could have on Canadian homeowners. Canadians are also advised to pay attention to the status of Canada\u2019s interest rates, the current mortgage climate, and any possible risk they may face in the housing market.<\/p>\n

 <\/p>\n

READ THE FULL RANKING ON BLOOMBERG<\/a><\/strong><\/h3>\n

 <\/p>\n

To learn more about WiiBid\u2019s innovative digital mortgage marketplace, visit<\/em>\u00a0www.wiibid.com<\/strong><\/a><\/p>\n

Follow<\/em>\u00a0@wiibidcanada<\/em><\/strong><\/a>\u00a0for deals and promotions to save even more on your mortgage through <\/em><\/p>\n

<\/h2>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Canada\u2019s real-estate market has entered a bubble with two new reports, reinforcing fears among housing experts who believe that the housing market is becoming further detached from the fundamentals. Bloomberg, the global news and data firm, generated a \u201cBubble Ranking\u201d, consisting of country scores based on home buying and real-estate factors: costs of buying a […]<\/p>\n","protected":false},"author":10,"featured_media":5395,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,3],"tags":[41,37,66,39,11,52,65,40,63,36,22,64],"class_list":["post-5272","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","category-important-news","tag-bc","tag-blog","tag-bubbly","tag-canada","tag-canadian-mortgage","tag-homebuyers","tag-homebuying","tag-housing-market","tag-interest-rates","tag-news","tag-real-estate","tag-risk"],"yoast_head":"\nCanada's "Bubbly" Housing Market Could Be Risky for Homebuyers - Blog<\/title>\n<meta name=\"description\" content=\"Canada\u2019s housing market has entered a bubble with two new reports, reinforcing fears among housing experts of the future of homebuying.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/wiibid.com\/?p=5272\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Canada's "Bubbly" Housing Market Could Be Risky for Homebuyers - 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