Overheated Property Markets to Flatten: Campbell
July 4, 2011 BNN
RBC raised residential mortgage rates Monday by as much as 15 basis points.
Don Campbell, president of the Real Estate Investment Network, tells BNN the increase will “barely, barely” affect mortgage payments and most of the banks won’t follow RBC's lead.
Campbell says he’d be very cautious about buying properties in overheated areas and to be very aware of what “average price” means. “When you see a 39 percent increase in Vancouver on $3 million dollar sales… that’s obviously skewing the price. It turns the headline into ‘Average Price in Vancouver is $1 million.’
“In reality you look at the condos, they’re down in the $500,000 range, it might be the size of a closet, but it’s still $500,000,”Campbell says.
In the downtown Toronto market, Campbell says there will be an oversupply problem in the next 18 months because more buildings will be transferred into occupancy. This will help the rental market, since it makes no sense to build new rental properties in Toronto or Vancouver.
“People who are speculating on condos won’t be able to flip them, and will therefore help rentals.”