Four Factors That Will Determine Canada's Real Estate Market in 2016

A barrel of gas is trading for less than $30, the loonie was at the lowest it has been in 15 years, however there is one part of our economy that doesn't seem to be affected, as the real estate market is showing little signs of slowing down on a national level. There are no price breaks anticipated for Canada's real estate market for 2016. The Toronto Real Estate Board is forecasting a jump in the average price of a home by nearly 10 per cent where demand outweighs supply in areas like the GTA.

The following will be some of the main factors impacting the housing market in 2016 and should be considered by anyone who is currently looking to purchase a property.

1) Prices of Oil

Prices of oil have hit lows that we haven't seen in decades. Some oil producing countries and companies have flooded the market with a surplus of supply, decreasing the cost of crude. This has negatively affected the Canadian energy sector which plays a major role in the national economy.

The gas, mining and oil sector accounts for more than a quarter of the national GDP (gross domestic product). Due to this, many employees have been laid off as Canadian oil production has come to a standstill.

When the energy sector is doing well, so does real estate especially in Western Canada. However, it is important to note that the housing markets in British Columbia is soaring as the prices of homes continue to rise but a different scenario is taking place in Alberta where the housing markets have plunged after experiencing many years of growth.

2) The Canadian Dollar

The Canadian dollar is currently worth 71 cents U.S., a rate that we haven't seen for many years.

Depending on where one resides in Canada, these numbers will have a substantial affect on the housing market in a particular area. Many companies and businesses in Canada are facing increased expenses and employees are losing jobs. Recently, Goodwill closed down 16 stores in Ontario and The Toronto Star has shut down its printing plant. These are two examples of companies that have experienced difficult times and are cutting jobs. The real estate market suffers when Canadians lose jobs.

3) Borrowing Costs

Mortgage rates can't get much lower. The price of oil and the low loonie have been major contributors to muted borrowing costs for Canadians. The mortgage rates are very affordable which is making it easier for people to purchase homes particularly first-time home buyers in smaller markets outside Vancouver, Toronto and Montreal.

As long as borrowing money is cheap, real estate prices will not be. For those who cannot enter the housing market due to the high prices, renting is the only option even though rent prices have also increased across the country.

4) Foreign Investment

For individuals who own property, increased foreign investment has been making their own property value rise. However, for the majority of Canadian who rent, foreign investment means rising real estate prices that were unaffordable to begin with.

Many residents of Vancouver are begin pushed out of the city due to over inflated real estate costs. Locals are demanding the government to intervene and take action. According to Dirk Meissner from the Canadian Press, the British Columbia Finance Ministry could lose $1 billion in real estate sales as well as nearly 4,000 construction jobs if the government intervenes to reduce foreign investment activity. The low Canadian dollar makes foreign investment extremely attractive.

The real estate market isn't showing signs of slowing down in 2016.

Reference: The Huffington Post Canada

http://www.huffingtonpost.ca/…/real-estate-trends-2016_b_90…