The more “The Sky is Falling” headlines there are in the news the better the readership. The challenge for readers is that often there is no factual data or analytical perspective in these articles. Here is a recent article in Better Dwelling about how drastically home prices are dropping.
More Canadians See Real Estate Prices Falling As Market Psychology Shifts: BMO - Better Dwelling
Quote: Vancouver the market price dropped last month by $28,500.
Fact: The average selling price went from $2,029,100 to $2,000,600.
Perspective: This drop is less than 1.5%. If prices went up 1.5% this would not be news. Dropping 1.5%
really isn’t news either, hence throwing in the big numbers.
In the Financial Post recently there was an article about how people will feel pressure with an interest rate increase.
What a Bank of Canada 0.75% rate hike would mean for mortgages | Financial Post
Quote: About a quarter of the Canadians who took part in the accountancy firm’s quarterly survey said
they are not financially prepared to deal with an interest rate increase of one percentage point
Fact: According to the Bank of Canada Financial System review about 35% of Canadians in a home are
home owners with a mortgage. Of that 35%, only 10% have a Variable Rate Mortgage. Of that 10% of
Variable Rate Mortgage holders only 2% have a mortgage payment that changes when the Prime Rates
Perspective: There is no reason to panic over interest rates. We have been at historical lows for over ten years. People who purchased homes and refinanced their homes had to qualify at in inflated rate to be protected in instances just like this.