Canadians Have More Equity In Homes
One thing I have noticed over the last year or so is how much of an affect the US media has on Canadians. This really shouldn’t be a surprise considering the number of US TV channels we have access to combined with the internet. It is really hard to avoid hearing everything that happens with our neighbour to the south….and why would we want to avoid it, in today’s global economy it is more important than ever to stay current on what is going on in the rest of the world.
Where I think we get in to a bit of trouble is when we don’t differentiate between the news we receive from our American neighbours and the news we receive from our local sources. We assume that due to the proximity and close relationship between the two countries what happens on one side of the border must hold true for the other side.
I see this problem pop up quite frequently when dealing with clients. They naturally assume the devastation in the housing and mortgage markets that the US is experiencing holds true for the Canadian market place. i would say one of the first questions many clients ask is “how will the US situation affect me” and the answer is, for the most part it won’t The Canadian banking industry is one of, if not thee most stable banking system in the world. Clients ask me if the lender I am placing them with will still be in business a year from now and my answer is always yes. Sure, the Canadian housing market has seen a modest correction in values, but that is a normal part of the real estate cycle and we are not experiencing the market weakness that our friends south of the border are going through
In yesterday’s Financial Post there was an article by Garry Marr talking about the amount of equity the average Canadian has in their home. You have most likely heard the stories of home owners in other countries walking away from their homes because they owed more on the property than the house was actually worth. This is called negative equity and is not a situation you want to find yourself in. You might be surprised to hear that the average Canadian has 72% equity in their house compared to 43% for the average American and only 2% of Canadians are in a negative equity position. Canada’s default rate is also very low at only .38%. All of this is a result of responsible lending practices by our banks.
So next time you hear a piece of news talking about the housing market or stability of lending institutions pay attention to the source….
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