Insolvency Levels Being Countered by Home Prices and Federal Aid Programs

Published August 10, 2020 by Real Estate Leads

There’s nothing even remotely rosy about all the fallout from the economic slowdown brought on by COVID, and experts are saying we’re only seeing the start of it. It’s true that there is much cause for pessimistic projections about how the economic turmoil is going to reach out and mess with people’s lives completely beyond their control, but one news bite that came from the Bank of Canada a little more than a week ago really caught our attention.

As anyone who’s been reading our weekly posts will know, we’ve been quite adamant in our insistence that the Canadian real estate market is going to weather the storm much better than many have forecasted it will. And that’s been borne out so far, with markets in many regions of the country proving to be plenty resilient. The downturns have been there no doubt, and what’s a competitive business for realtors is even more so now. This is what makes our online real estate lead generation system here at Real Estate Leads such a valuable resource for anyone who’s not well established in the business.

But if we look at the role of a surprisingly strong housing market in the way its protecting some Canadians from financial devastation it really can be construed as a ‘feel somewhat good’ story, if you will. These days nothing is a particularly feel ‘good’ story in the big picture of things, but we do take the opportunity to highlight news which does point to the resiliency of the housing market in Canada

Home Prices Recovery a Big Help

The extensive and far reaching recovery seen recently in the Canadian housing market is really good to see, and that’s true no matter what your interest in it is. But what’s really good to see is how prices coming back to what the should be is becoming a significant factor in keeping households liquid despite COVID-19 ravaging incomes, investments and the like.

The Government has been suitably proactive in slowing insolvency growth and everyone has been pleased to see industry initiatives like financial aid and mortgage payment postponements. The Federal Liberal Government is very aware of what the Real Estate Industry means for the country’s prosperity, both nationally and on the individual Provincial level too.

And all of this course makes no mention of the fact that many good, hardworking Canadians have considerable investment in the equity of their homes and that needs to be respected on all levels. People work very hard to be able to afford a home and all of that hard work and sacrifice should be protected and allowing them to continue to have that investment in their future.

Mortgage Deferrals Especially Timely

Making it so that homeowners can lawfully defer payments on their mortgages has been a really needed move, and one that obviously has been well received by both homeowners and others concerned about the strength of both economies and communities. It allows people to adapt to changes in their working arrangements while at the same time not absolving them of their responsibilities to lenders.

Those mortgage payments will be made in the future, but in the here and now it both keeps families in homes and allows the value in those homes to grow in the way it should in order for there to be a healthy real estate market in Canada. One that rewards homeowners, contributes to CDPs both Federally and Provincially, and has a positive trickle down effect for EVERYONE who works in relation to the housing and real estate industries in some capacity.

Good Growth in Mortgage Segment

These developments have been joined by noticeable growth in the mortgage segment, plus a more modest uptick in household debt. The last part of that is particularly telling AND positive, because while debt at face value isn’t a good thing if more people are taking it on to afford housing it means they are not in as dire straits as they might have been otherwise.

Data from the central bank showed that overall mortgage credit stood at a record high of $1.68 trillion in May with a 6% annual increase, while household credit was at $2.29 trillion with 3.6% year-over-year growth. That people are willing to assume this is a good sign for the continued health of the real estate industry, and for those who rely on its vibrancy to provide them with a living.

Realtors among the many of those different types of interest groups, but also for homeowners themselves who may – among many other different scenarios – be open to remortgaging a home to keep them afloat rather than consider bankruptcy because the protected value in the home allows them to do that.

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