USA Housing Still in Turmoil

For those who thought that things were getting better in the USA, have a look at these sobering numbers: The median sale price for resale homes is down more than 5% compared to last year; distressed sales accounted for more than 31% of all transactions; and depending on the source there are anywhere between 3 and 4 million homes that will hit the market as foreclosures in the next 18 months.

The U.S. economy isn’t on strong footing, and the government and Fed Reserve there are doing everything they can to keep borrowing costs low and drive money into the economy to keep people employed.

Flip over to Canada and you can’t help but think that we are in a much better situation, but we would be fooling ourselves if we thought that the U.S. problems won’t spill over to us in some way. For example, as the U.S. GDP shrinks, there’s less demand for imports, including ours from Canada. So that will make it harder on our exporters. Think big ticket items like cars, and you start to see where this can go. For every automotive job that gets lost another 4-6 jobs in the same community are lost.

There’s a distinct worry that we can fall into another recession, and it is well founded when considering the U.S. situation. The good news is that borrowing costs should remain low for some time as a result of weak economic factors here, in the USA and Europe. This means mortgage rates should stay low into 2013.

While the USA’s housing market will continue to weaken we are fortunate to have ours remain flat. That will be the theme in housing prices and number of sales in the coming year, in Canada.

Cheers,
Chris
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Christopher Bisson
The Mortgage Centre
1-866-838-4366 x1003

www.mortgageconcierge.ca