Bank of Canada says, What Bubble?
The Governor disagrees with organizations, such as the Fitch Rating service and the OECD (Organization for Economic Co-operation and Development), who predict that Real Estate prices are as much as 21% inflated and that interest rates need to be raised. He believes the only factor that would strongly influence the marketplace would come from international disturbances such as a major economic collapse.
The Bank of Canada states that the fundamentals which surround the marketplace for Canadian housing are in good shape and are trending towards continued market growth. The economy is recovering and that should lead to further job opportunities. Furthermore, Poloz states that due to new lending restrictions by Banks the market is now in an even better position.
A call from the OECD was made to the Bank of Canada to raise interest rates to 2.25% by the end of 2015, and get away from its current 1% policy rate by the end of this year. Poloz stated that he respectfully disagreed with their analysis and maintains that with the Canadian economy in its current state and inflation at 1.1%, that interest rate hikes such as those proposed are not necessary.
For many who own North Vancouver Real Estate it is a sigh of relief that a reputable member of the Bank of Canada maintains such a positive outlook for the housing market; meaning continued growth of market prices. We have heard predictions and read articles that all call for a collapse of Vancouver real estate prices in the near future. Many have advised that homeowners sell their properties now, rent in the interim, and wait for the market to crash at which time they can purchase again.
Fitch Ratings also released their report which indicated that Canadian house prices were inflated as much as 21%, which would inevitably lead to a heavy market correction. However, when the Bank of Canada says outright that they simply disagree with this prediction and maintain their stance that their view on market conditions call for further growth, it creates an interesting division of opinion.
To my knowledge, nobody possesses a magic crystal ball that can see into the future and predict how market conditions will unfold. Many may state that a market correction is in order, simply because prices have reached an unprecedented level, however some were calling for this correction years ago and yet prices have still increased. Despite lending restrictions implemented over the past year, and a comparatively slow housing market in 2012, home prices hardly budged.
Owning a North Vancouver home builds credit and builds equity. Despite changes in the marketplace, you are still putting equity into your property by paying your mortgage. Paying into a mortgage earns equity, the difference between owning and renting is simply a matter of whose mortgage you're paying. By renting you get nothing back at the end of the day, so even if you’re paying less per month than you would with a mortgage, instead of getting a portion of those payments back when you sell, you simply walk away from them as the cost associated with renting.
If you're interested, have a look at some of the Homes for Sale in North Vancouver and check out some of the New Developments.