What does it all MEAN?
We can't seem to escape all the gloom and doom predictions in today's news. Even if we don't read the newspapers, watch the TV News or listen to the radio, it's hard to ignore our friends and fellow workers when they start talking about the economy and what it all means!
A huge amount of the news we hear comes from the US. And though the US economy greatly influences OUR economy, there is still a difference.
Real Estate has been, is and will likely continue to be, one of the BEST investments you can make. In spite of everything you hear on the news, here are some positive economic forecasts and statistics from
the Canadian Real Estate Association.
"Canadian economic growth is forecast to start improving in the
second half of 2009 before accelerating in 2010. Re-aligning housing market
balance and improving home affordability will set the stage for an improving
housing market in 2010."
So, 2010 is looking good, what about now?
"National
home sales activity is now forecast to decrease by 12 per cent to 461,200
units in 2008, and decrease by three per cent in 2009. The number of new
listings is forecast to decline further from the peak reached in the second
quarter of 2008, with levels in 2009 on par with levels in 2007.
Fewer new listings will stabilize the resale housing market in
2009. Average home prices will reach new heights in nearly all provinces in
2008, but declining activity in higher priced markets will hold the national
average price stable this year compared to 2007."
CREA President Calvin Lindberg says:
"Canadians are definitely concerned by the economic news
out of the U.S., and much of that news stems from distress in the U.S.
housing market. Canadians should realize that Canada's economy and housing
market are both in better shape. This means the downturn in Canadian consumer
confidence will pass and when it does, housing demand will rebound,
especially when they realize the window of opportunity to buy at reduced
prices and at low interest rates will begin to narrow once economic growth
shows signs of rebounding next year."
Several days after the Canadian Real Estate Association forecast came news from the Bank of Canada.
The Canadian government will triple the amount of insured mortgages it
will buy from banks as part of the measures it announced to
improve the availability of long-term credit.
What does this mean to YOU?
Basically
CMHC is stepping in and offering to buy up to $75 Billion worth of mortgages from the banks. This will be a
money making venture for the Canadian government because few of the loans in
question are expected to default. Thus the "discounted price" offered by the banks will
represent profit to the system.
CMHC is in essence, greasing
the wheels of the lending machine! The financial issue we are experiencing is a liquidity issue not an
issue of people missing payments or failing to meet their mortgage obligations. The liquidity issue has meant that the banks have been noticeably more strict and
much less willing to allow any exceptions to their lending guidelines.
Finance Minister Jim Flaherty said that this move will help average Canadians by making "consumer and
mortgage loans more affordable and more available."
This move will
help kick start the lending cycle. In short,
this plan should make the lenders more willing to lend!
Call Averbach Mortgages today for expert advice on how to to get the best mortgage ... a mortgage that gives you the flexibility to pay off your mortgage sooner!