Unique Factors Protect the Canadian Real Estate Market

Posted in Real Insights | May 1, 2008

Did you know that the Canadian real estate market has many built-in features that moderate volatility? More than 25% of 2006 U.S. mortgages were “sub-prime” vs. only 3% in Canada. All high-ratio mortgages here, defined as having less than 20% down, are insured by CMHC. Four out of five Canadian homeowners pay their mortgage as quickly as possible; almost 85% make frequent payments to speed amortization; and one-third make lump-sum payments against principal. Real estate speculation in Canada runs at less than half the rate of the U.S. While the U.S. market has swung into negative territory, Canadian real estate prices are holding steady in a “balanced market.”