What have we learned from the U.S. market?

Real Estate Matters – October 31, 2008.

There’s been an incredible amount of talk over the past several months about what’s taking place in the U.S. market. And while conditions here in Canada may vary dramatically from what’s happening south of the border, there are still many valuable lessons that we can learn from what has taken place there.

Surprisingly, there are ways that we have actually benefited from what has happened in the U.S. For example, recent events have provided the impetus for actions by the Canadian government to further strengthen what is already a far more stringent financial system here. Finance Canada has moved to clamp down on those buyers who may be heavily leveraged in their bid to become homeowners. Previously, buyers had been able to finance 100% of a home’s purchase price. Effective October 15, 2008, purchasers are required to make a minimum 5% down payment. In another prudent financial move, the maximum amortization period for mortgages has been reduced from 40 to 35 years. These measures will strengthen the foundation of the Canadian real estate market.

There’s another benefit that has come out of the sub-prime controversy in the U.S. It has helped to create a more cautious mindset on the part of homebuyers here in Canada. This makes the services of a Coldwell Banker® sales representative even more valued, because we help buyers find a home they can afford and serve as a second set of eyes and ears to help ensure buyers are not over-reaching. And well-qualified buyers mean good news for sellers too!

Another way that Canadians can benefit from what’s happened in the U.S., is by learning from their mistakes. While the media reported almost entirely negative news and focused on declines in sales and house prices, no one was bringing the consumer’s attention to the high points – and yes, there were quite a few – that went unnoticed. The real estate industry there is fighting an uphill battle now, trying to get out the other side of the story and give the public a more balanced perspective.

You see, even a changing market brings new opportunities. More inventory to choose from, motivated sellers and lower interest rates are all good news for buyers. Sellers have good news too, since recent interest rate cuts have lowered the carrying costs of homes to more affordable levels. And that brings new buyers back into the market. So let’s remember to look at both sides of a changing market – and see the challenges and the opportunities. And when you’re ready to explore those new opportunities, your Coldwell Banker® sales representative will be there to help you use them to your best advantage.