2011: Another Step Closer to Recovery

The GTA housing market performed surprisingly well in 2010, and 2011 home sales are expected to almost mirror those of last year. Since the real estate bottom hit in 2008, there's been a slow climb back up to levels and conditions similar to 2003-06, meaning a more balanced supply and demand environment. Canada Mortgage and Housing Corporation (CMHC) is expecting flat prices for the GTA with slight value appreciations in the 905 area codes. The overall 2011 housing projections for Canada is referred to as "Decent volumes without dramatic movements".

Is 2011 a good time to buy? Timing when to buy a home is very tricky business and there's no crystal ball that can help. In my opinion, you are buying a home for you and your family, which is very difficult to put on a spreadsheet. I would suggest you venture into real estate with expectations of living in pleasant surroundings for a reasonable amount of time; I am confident your home value will appreciate as did your parents' home before you. Conversely, if you plan to occupy a new home for only a year or two, you may be challenged in realizing any profit considering property value increases in 2012 are expected to be less than those in 2010 and 2011. If you are prepared to speculate short-term on real estate, I can only wish you good luck!

Is 2011 a good year to borrow? Didn't you hear the sky is falling? Interest rates are going up and we should all be very afraid! You don't have to be a financial guru to understand that currently we are spoiled with crazy low interest rates and, as the economy gradually improves, over the next five years (it won't happen overnight) all of us should be paying more normal mortgage rates of around 5-6%. Keep in mind that regulators do not allow lenders to calculate your debt obligations on current rates. When securing a variable rate mortgage at 2.2%, the mortgage provider is required to use an interest rate of over 5% when determining your budget or comfort zone…this is an excellent Government safety net to avoid future "payment shock". Let me remind you as well that 5-6% is historically an amazing mortgage rate and if you doubt that, just ask your parents.