Canadian Real Estate Market - Is it Really That Bad?

Is the Canadian Economy as bad off as the media says it is? Watching the news one would think Canada is in a melt down, but the media is skewing statistics to make things out to be worse then they are.

A Canadian TV News Media reported in January that in 2007 there were over 2500 foreclosures (sorry I didn't take notes) and in 2008 the rate of foreclosures was up over 9%. Wow 9% sounds terrible doesn't it, after all its close to 10% and that's horrible. But think about it, it means that there was an extra 2,000 foreclosures in 2008 over 2007 in Canada. Considering all the millions of mortgages that are out there 27,000 foreclosures isn't a huge amount. Notice they also didn't mention how many foreclosures there were during 2005 and 2006 when the market was inflating.

Finding the number of foreclosures in Canada isn't as easy as I thought it would be but I did find the bank associations data on mortgages in arrears. These are the % of mortgages in arrears taken from the monthly numbers as an example:

October 1991 0.57%
October 1994 0.49%
October 1996 0.24%
October 1999 0.43%
October 2001 0.44%
October 2005 0.26%
October 2006 0.24%
October 2007 0.26%
October 2008 0.29%

Graph of Canadian Vrs US

The numbers are from Canada's seven major banks, which together issue about 60 per cent of the country's mortgages.

In B.C., only 0.15 per cent of those mortgages were in arrears in April 2008, the last month for which data is available. That number has steadily declined from about 0.65 per cent in 2001.

Meanwhile, 0.26 per cent of mortgages nationally were in arrears in April, a number that has held fairly steady since 2004.

"And by implication, the foreclosure rate remains quite low - if not historically low - in Canada," Guatieri said. "And it's miles different from the U.S. situation."

Does knowing that mortgages in arrears in 2008 were lower then mortgages in arrears during the 1990's and early 2000s change your opinion on the health of Canadian Mortgages?

Everyone looks at housing prices as an indicator as to whether or not the real estate market is going good or bad, but is it as bad as we think it is? It was worse during the early 1990s - Check out the graph if you don't believe me. In 1991 my mother went into Real Estate and looking at the graph one would think that 1991 was the worse time to become a realtor. Many realtors at that time were quitting, closing up shop and changing careers. The Okanagan during the early 1990s was hit hard and their recovery was very slow due to lack of industry, yet she made a good solid career as a realtor during this time. The economy has little to do with whether or not a business will survive an economic downturn - it is up to the choices of the business owner.

Links:
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Southern Alberta Real Estate Market is Steady.