Glacier Recycle

Canadian home buyers and homeowners rejoiced in early 2011 when the Bank of Canada lowered its rates to all-time lows in response to the global financial crisis. And while that helped curb Canadians’ average household debt greatly, it also had a big impact on the housing market. As the interest rate went low, and stayed low, home prices across Canada shot up. And in many cases, way up! This created the potential problem of the real estate bubble, and left many wondering if it would burst across Waterloo and Kitchener real estate.

When a real estate bubble is in effect, housing prices continue to climb and climb; this is the “bubble,” continuing to grow and float, seemingly without end. Then something drastic happens to affect the housing market, and that bubble bursts. When that happens, homeowners are now left with an overpriced home, and an inflated mortgage, and a property that doesn’t have the equity or the value to match. This is something that is now being seen in the United States with underwater mortgages, where the home carries more debt than equity. It’s a very serious concern, but probably not one that will affect Kitchener or Waterloo real estate.

The bubble effect has been seen growing in certain Canadian housing markets, and it’s in these markets that have special area of concern. Vancouver real estate is at an all-time high, with the average price of a home being $750,000. Montreal’s real estate is also sitting at record highs and even closer to home in Ontario, homes in Toronto are going for an average price of $450,000. With such a widespread epidemic, it really does seem like the whole country might be in a bit of a bubble effect, but that’s not the case.

Both Waterloo real estate and Kitchener real estate have remained steady during the past several years. While all markets took a bit of a dip during the height of the recession, the Waterloo and Kitchener real estate markets were one of the first to rebound from the crisis and continue to offer homebuyers consistently priced real estate. With prices never going sky-high, regardless of what interest rates or other housing markets were doing, there was never any chance for a real estate bubble to grow, let alone burst.

The Waterloo and Kitchener areas have always been some of the most beautiful and prosperous places that you could live in Canada. But looking at the housing markets across the rest of the country this past year, and seeing how stable the Kitchener and Waterloo real estate markets have always remained, it can’t be ignored that this is just one more reason why this area is still one of the best places to invest in real estate. And one where there’s absolutely no worry about any kind of bubble effect.