CREA says home prices are up an average of 11.3% nationwide versus last year. Given the recession we just went through, that’s nothing short of stunning.
Economists say cheap mortgage rates are the main factor.
“I think [low mortgage rates are] having the effect of putting people into homes at an earlier stage than would have otherwise been the case,” Scotia economist, Derek Holt, told the Globe.
Buoyant consumer confidence is also playing a role. Yet, as CIBC economist, Ben Tal, believes, employment is more important than consumer confidence.
“If I don’t have confidence that I will have my job tomorrow, you can offer me a 0% mortgage and I will not take it,” he says. “If you know your job will be there, you jump on it. That’s what’s happening. People know this will not last forever.”
But Holt warns: “I do worry, longer term, not even that far out–two or three years from now–once short and long interest rates are probably higher…whether a lot of those mortgages will be as easy to carry as they are right now…”
“The kind of strength we’ve seen of late isn’t necessarily sustainable.”