Categorized | International

Canadian Officials Warn of Housing Decline

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Government officials in Canada announced that they plan to increase their supervision and regulation of the Canadian real estate market. Increased fears regarding the possibility of a potential residential real estate crash most definitely inspired the governmental decision.

 

Government officials believe that the current housing market is growing out of control, and that risks for a crash are mounting. They claim that the market has, in general, become overvalued, and consumers are adding too much debt to already record debt levels. There is no doubt that the low mortgage loan rates that are currently in place are making it easy for consumers to borrow more than ever before seen in Canada.

 

Lenders, however, are lashing out at the recent government decision, and believe that increased oversight will have unintended consequences that could cripple the Canadian economy. They argue that Canada’s current housing market model has been incredibly successful in recent years, and that government intervention could cause a massive decline in housing prices.

 

Housing prices across the country continue to rise, as they are up by nearly seven percent from last year. Government officials, though, are not overly optimistic about the market, and believe that the market is actually overvalued by more than ten percent.

 

Officials believe that there is an oversupply of homes on the market, and that should supply continue to increase, the market could be facing a dire situation as early as 2013 or 2014. With debt at increased levels, the average household is very much vulnerable to swings in the housing market, and the government believes that without oversight, the potential damage could grow far worse.

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About Nancy Raven

Nancy is the main writer for the International section of the website. Sometimes she also helps Drew out on the Finance/Mortgage section as well.

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