Is this the right time to be buying a house?
Erika believes the real estate market will crash. Here's what she should do
Why are mortgages so expensive in Canada?
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Ratehub.ca
Q: Our lease is up in six months and, with a down payment saved, we want to buy our first house. But we’re worried about a housing market poised to crash. What should we do?
—Erika, Toronto
A: In 2016, CMHC identified that as many as 15 of the largest housing markets in Canada were overvalued, some by as much as 60%. This assessment by the country’s national housing agency was based on overall evidence of “problematic conditions” particularly in markets like Vancouver, Calgary, Saskatoon, Regina and Toronto. But don’t expect a 60% drop in home prices. Bob Dugan, CMHC’s chief economist, explains that “real estate markets are inherently local” and that if there is a correction it wouldn’t occur uniformly across the country, or even within a city. The purpose of CMHC’s analysis is to remind industry stakeholders to address market concerns—such as tightening mortgage rules or increasing how much money lenders hold back. As for you, I’d suggest making a home-buying decision based on your short-term needs and your long-term goals. Stick with your own plan, and tune out the market—it’s always the best strategy for any financial decision.
More questions answered:
- Qualifying for the Home Buyers’ Plan
- Tips for U.S. residents buying Canadian real estate
- Is an income property worth it?
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