Friday, May 31, 2013

Home ownership a passion for Canadians

Canadians have a love affair with their homes, stretching their finances to buy them, sacrificing other things to have a house or condo and remaining deeply in debt even when the numbers suggest they would be better off renting.

North American stock markets continue to reach new highs every day but don’t tell anybody in organized real estate about it. It’s not something the industry wants to hear. But here you go: By the end of last year real estate prices had climbed about 85% over the previous decade, according to the Teranet/National Composite Bank House Price Index.

It is a passion for ownership that has put Canada in the elite company of countries with estimates that more than 70% of households now own their own home. Even young people have caught the housing bug. Statistics Canada says much of the increase in home ownership — the number was 68.4% in 2006 — has been from young people buying condos.

In the dozen years since the beginning of the millennium, home prices rose 225%. Those prices were largely financed by household debt which rose to 160% of family income in 2012 from 100% in 2000, says Benjamin Tal, deputy chief economist for CIBC in Toronto. “House prices in Canada continue to defy gravity.”

There is good reason for that.

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