The state of the Canadian real estate market is often dependent on what city or province you are in. The Canadian real estate market is often volatile, unpredictable, and downright interesting at times. The prices of real estate have risen tremendously in real estate, raising questions about the value and affordability of purchasing a new home in the current climate. Cities such as Vancouver and Toronto have seen prices surge exponentially. Numerous people and experts are worried that the current situation is going to trigger an epic meltdown.
Toronto houses are incredibly expensive
The prices of homes in Toronto have been skyrocketing and crossed a milestone in February 2015 for detached houses. The average price of a detached home in the city crossed the $1 million mark, cementing Toronto’s rise as one of the most expensive cities on Earth and putting it in the same league as the likes of London, New York, and Zurich. This hasn’t really slowed down luxury buyers as well as multiple offers for detached houses are incredibly common.
Homes have generally become more expensive
The average price of a home in Canada has soared by at least 40-50% since 2006 depending on where you live. This is bad news for prospective homeowners and great news for homeowners. The national average price of a home was $338, 900 in 2006 while it is now $481,000 as of September 2016. The average income is around $80,000 as of 2015, putting the price-to-income ratio at just over six times.
Canadians are drowning in debt
Canadians are awash in record debt levels in numerous venues including mortgage debt. Credit card, student and vehicle debt have also reached record levels at various points in the last two years. In 2014, Canada’s debt-to-disposable ratio was 163.3%, a new record which exceeded the ratio that the neighboring United States experienced in 2007.
Experts agree about overvaluation
The International Monetary Fund is the opinion that the market has become overheated and is at the risk of bursting. Deutsche Bank warns its customers by saying that homes are overvalued by nearly two-thirds. Leading banks such as Citibank, JP Morgan, and Goldman Sachs regularly warn their clients about the bubble and advise them to secure their finances completely before any form of investment.