San Jose, California (PressExposure) March 12, 2011 -- The Vancouver real estate market may be experiencing a shuffling but Canadians in general are managing their debt with greater gusto than imagined. They have enlightened themselves to smarter spending and borrowing strategies. The major bank of Canada has issued public warnings against huge debts but the credit crunch in the market has softened to some degree. In the closing quarter of 2010, purses and wallets slammed shut to the sounds of the increasing inflation. The typical household debt hit a record of 140% or better, which caused a stir among bankers.
Canada is not facing a real estate market meltdown nor a financial meltdown because of the high debt. The Bank of Canada has issued new regulations to the mortgage system that will slow down the purchases of all forms of properties but the residential area is the most affected by these changes. There are extreme exaggerations about the financial state and real estate market. The debt arrived from homeowners double mortgaging on their homes to pay down some bills and other emergencies.
A housing crash consists of many variables and these terms have to be met. The terms include a huge jump in interest rates or a breakdown in a financial zone. Canada had not experienced either shift and the economy is recovering from a major stall. The skyrocketing housing prices should not have been surprise. The overreach of the Canadian banking system to borrowers is the cause for the debt alarm, even though the banks are a conservative system. In regards to the regional real estate market and consumers, the personal debt accumulated is not enough to cause economists to forecast an impending doom.
The contrary is evident with the current stability of the Vancouver real estate, the sellers are making profit to pay down their debt and put away a little extra. The main cause of stress is from the waiting period for buyers to show the financial strength to buy the home. The braking of the consumer's wallets is only adding pressure to the economy; this will cause a setback for all markets.
The interest rates will squeeze at the spending power of the consumer, unless the debt on a national scale can decrease. This would cause problems to the economy but the likelihood of this event is about the chances of winning the European lottery in America. The realistic view of the real estate debt is the consumers are paying down their mortgages even with the strangling laws that are going to be in effect this spring.