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August 30, 2002. Numerous reports
from across the country report that the housing sector has
been hot since it started to take off in the second half of
2001.Canada Mortgage and Housing Corporation (CMHC), Greater
Edmonton Home Builders Association (GEHBA) and the Edmonton
Real Estate Board (EREB) report that both new housing starts
and sales of existing homes have soared. Unquestionably, this
housing sector has been significant to revitalizing Canada's
economy.
Housing spin-offs
According to a June 2002 report released by Clayton Research,
the housing sector accounted for one-third of Canadian GDP
growth in the past year.
Recent homebuyers have higher spending
on various items than other households. For example, according
to Statistics Canada, 1998, households that bought a home
in that year had roughly twice the average spending as other
homeowners on renovations, furnishings and appliances.
Data from The FIRM Survey, conducted each
quarter by Clayton Research and Ipsos-NPD, states that households
that bought a home in the past two years are more likely to
have purchased or taken our a new lease on a vehicle in the
past year than other homeowners.
Increased home buying activity also stimulates
mortgage demand. FIRM data also shows that over 85%
of households that bought a home in the past two years have
a mortgage. The average size of these buyers is over $110,000,
compared to about $73,000 for other homeowners
with mortgages.
Sometimes home buying can leave purchasers
short of cash. Not surprisingly, recent homeowners often arrange
for higher borrowing with loans and lines of credit than other
homeowners.
The Clayton report also suggests that
employment in the construction industry has grown by 14
percent since the first quarter of 1999. This is
more than twice the rate for the economy as a whole.
Housing's direct economic contribution
is up
Housing significantly contributes to Canada's economy. From
the early 1960s, through the late 1980s, housing contributed
roughly six percent to the total Canadian economy. The strongest
periods were during the housing boom of the late 1980s and
late 1970s, when rental apartment construction was very strong.
The housing sector under-performed in
the 1990s. However, with the recent housing market resurgence,
the housing sector has accounted for a rising proportion of
economic activity.
The report also suggests that housing
will continue to exert a positive impact on the economy into
2003.
- An affordable form of insurance
- Calculating Gross Debt Service (GDS)
- Calculating Total Debt Service (TDS)
- Your monthly mortgage payments
Work through the following
worksheet to see what you can afford.
Don't forget about
closing costs
Current mortgage
rates
Back to basics
investing approach
Solid
reasons for investing in real estate
Real estate remains hot
in 2003
Home buying and
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