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Real Estate News: Household wealth ‘For Richer or Poorer’

September 15, 2009

Oakville & Mississauga Real Estate - house rich cash poor Didn’t you hear?? Canadian households are wealthier.  After losing ground in the last three quarters, things have improved in the second quarter of 2009 with stock market gains leading the rebound – or so said Statistics Canada said Monday.

“Canadian stock markets recovered partially in the second quarter, with the S&P/Toronto Stock Exchange composite index up nearly 20 per cent,” Statscan said.

“The resulting increase in the value of household financial assets (including shares, mutual funds and pension assets) was the principal factor behind the rise in household net worth,”

Ok so before you run to the bank a la Jerry McGuire screaming “Show me the money!!”  This isn’t really all good news, at least in my opinion.  So what we’re saying here, is basically people have more value in assets (like Real Estate) but no money or savings, or at least less money – and this is positive? Hmmm.

The use of credit also rose reportedly more quickly in the quarter.  With the Real Estate markets taking off after February, mortgage debt led the way.  So while resale housing prices are rising people are taking on more debt because of the attractive mortgage rates.

Where home buyers and sellers need to exercise caution is while home values are up in Oakville, Mississauga and the GTA as a whole, people are selling high and buying higher, eroding their equity and financial strength.

So, in theory this is positive news as it suggests that the overall economic situation is improving. Perhaps the worst of the financial crises in Canada is now behind.  I would advise homeowners and home buyers to be cautious and ensure that they do not become house rich and cash poor.

Hopefully other areas of the economy will improve as many businesses and companies are still struggling to regain their footing and are buried in wage freezes and budget tightening.  On this note, Statistics Canada reported that the net worth of corporations fell by $208-billion in the second quarter.

Do you feel like a financial slave to your home or condo?

Are you scared that downsizing in today’s Real Estate market really means buying up?

Comment and share your thoughts…

Related Reading:  Read “Canadian household wealth rebounds” by Virginia Galt in the Globe and Mail – Monday September 14, 2009

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    If you would like to discuss your Real Estate situation or are looking to buy or sell a home or condo contact me for a confidential assessment.

    I have been a licensed Real Estate broker since 1997 and service the Burlington, Oakville, Mississauga and west Toronto Real Estate markets.  Visit my website for Real Estate listings and information on homes and condos in the Oakville, Mississauga and west Toronto Real Estate markets.
    Follow me on Twitter @OakvilleRealtor
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