I HOPE THIS ENDS WELL:  HOME PRICES ON FIRE

As a mortgage consultant and home owner I guess I should be happy home prices are going up and I am.  But at Robert Floris’ Mortgage Architects office it also makes us reflect on how higher home prices will impact us all.  The stunning news that Toronto home prices went up 28% in a year has certainly made people talk.  It should also be noted prices rose 35% in the Toronto suburbs including the (905) which of course includes Hamilton.

While I was at a party last night, everyone seemed eager to discuss real estate and why not, we were getting richer by the day.  My worry (as always) is whether the prices were sustainable.  Mortgage rates in Canada are still outstanding and the economy appears okay.

I will list reasons why I am cautious:

– average median income has gone up 7.5 to 10 years;

– two Canadian CEOs (RBC and Scotia) are now concerned about a housing bubble;

– Canadian debt levels are higher than the U.S. when their real estate market crashed;

– many of my clients are not talking about flipping homes, because it is too easy;

– This eerily reminds me of the late 80’s when I started my career and the euphoria was the same.

It did not end well, in the late 80’s and early 90’s and many people got hurt.  It was very hard to work in a period where families lost homes and money suddenly dried up.  Please be cautious and if you have debt please refinance while you still can.