Real Estate, Canada vs U.S.
Real Estate: Comparing
Canada and the US
Fiona Anderson, Vancouver Sun
"KUOW radio in Seattle this morning had a discussion about home ownership around the world, comparing Canada, the United States and Europe. As it turns out Canada has one of the largest percentages of home ownership - between 60 to 70 per cent.
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"The main thing is that while insurance is available (and usually mandatory) for borrowers who have less than 20 per cent of a down payment, the insurance isn't automatic. Canada Mortgage and Housing Corp, as well as the other mortgage insurers like Genworth, still have pretty stringent rules about what mortgages they will insure. So borrowers still need to have a good credit rating, good income to make payments and an acceptable debt service ratio. That's probably the biggest difference between the Canadian and US housing markets. In the US one of the problems was that insurers were insuring sub-prime mortgages, where the lenders didn't have good credit, and whose income may have been sketchy. Then when the borrower defaulted the insurer was left holding the bag (or the bank if the insurer - and there were many of them - didn't have the money).
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"With those requirements arrears on mortgage in Canada are about 0.42 per cent according to the Canadian Association of Accredited Mortgage Professionals. CAAMP has some other interesting statistics. For example, while the total value of owner-occupied housing in Canada is estimated at $2.91 trillion, mortgages on these homes total $820 billion, or only about 28% per cent. In other words, most people have quite a bit of equity built up in their homes.
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