Most people are aware that real estate prices in Canada have been climbing exponentially in recent years. In an article of the news outlet Better Dwelling, the publication notes that according to a new analysis from BMO Capital Markets, Canadian real estate prices are a whopping 38% overvalued.
Since 2020 alone, the price of a typical home across Canada has increased 57%. Far from a trend only affecting buyers in major metropolitan areas, the average price of a Canadian home across the country was $882,400 in April of this year.
Most forecasters believe a home price correction is immanent, and there are signs one is already underway. The sales to new listings ratio fell to 66% in April, well below the 76% average of the past year. BMO warns that we can expect to see price growth fall to zero in just three months – leaving many recent buyers in a precarious position.
Mortgage rates are climbing, although homeowners have usually been able to cover these increases as they correspond with home price appreciation. What will happen if price growth stabilizes, but mortgage payments and inflation continue to trend upwards? This question has recent buyers nervous, especially outside of Canada’s population centres.
If you or your clients are facing foreclosure as mortgage rates continue to rise, the lawyers at Gehlen Dabbs can help guide you through uncertain times.