What you need to know about buying U.S. real estate

The financial crisis that began in 2007 with the breakdown of the U.S. residential mortgage market still persists for millions of Americans who have lost their houses, their jobs and all hope of a secure retirement.

As a result, residential real estate prices in the hardest-hit areas such as California, Arizona, Nevada and Florida are well below replacement value (i.e., the land is valued at zero), leading many analysts to conclude that prices must be near, if not already at, the bottom.

Taken together, these facts seem to suggest that Canadians have a once-in-a-lifetime opportunity: To buy U.S. real estate in desirable locations at historically low prices using cheap U.S. dollars. Seems like a slam dunk, right? Maybe. But there are a number of factors to consider before pulling out your cheque book and booking a flight.

If you have always wanted a vacation home in the sun and are planning to buy a property that you will use yourself, then this seems like the perfect time to buy. In addition to enjoying your new home for years to come, it is more than likely that it will appreciate in value during that time.

If you are approaching the opportunity strictly as an investor, with the basic plan of buy-rent-sell.

Click here to see the following list of what to expect.

Canada housing prices won’t crash: poll

OTTAWA — Canada’s government will make it tougher for many homebuyers to get mortgages this year as it grapples with an overheated property market, according to analysts in a Reuters poll, who also ruled out the prospect that prices could suddenly crash.

Ten of 14 economists and strategists surveyed last week in Reuters’ first poll on the Canadian housing sector answered “yes” when asked if they thought Ottawa would tighten mortgage rules within the next 12 months.

Any move would likely come before the prime spring real estate season, analysts said. “Sometime between now and the next budget,” said Benoit Durocher, senior economist at Desjardins in Montreal, on the timing of such a move.

Housing Market has 2 good years ahead!

Canada’s housing market has two good years ahead of it yet, CMHC said Monday, with low interest rates and a “moderately” expanding economy keeping price corrections at bay.

Canadian banks have recently issued reports probing the consequences of cheap money, and trying to predict whether there is a bubble in prices that will eventually pop and cause prices to crash. They are particularly concerned about Vancouver and Toronto, where some have predicted price corrections of up to 10% because of overbuilding in the condo market.

But CMHC said Monday Canadian markets would “remain steady in 2012 and 2013.”

Click here to read the complete article form the Globe and Mail

Carney Holds Rates Steady

Mark Carney held the overnight interest rate at 1% for the 11th consecutive meeting. Bond yields have also dropped to record lows in the past few weeks which have pushed CDN lending institutions to cut the 5 year rate to as low as 2.99% and the 10 year fixed rate to a record low of 3.89%.

Carney noted he is worried about the level of Canadian household debt with these low interest rates, but said the economy is too weak to justify higher rates anytime soon.

Bank of Canada seen on hold until 2013

A deteriorating European with slower growth and the longer we go without economy and weak global growth will keep the Bank of Canada from raising rates for at least another year, though an interest rate cut looks highly unlikely, according to a Reuters survey

The Reuters poll of 41 economists and strategists released on Tuesday showed the median forecast for the next interest rate hike was pushed back by three months to the first quarter of 2013 from the fourth quarter of 2012 projected in a November poll. The Bank of Canada's target for the overnight rate - its main policy rate - has been at 1 percent for more than a year.

Click here to read the complete article from Reuters Canada

Bank of Canada holds rate at 1% as expected

Mark Carney announced today the the Bank of Canada is maintaining the key interest rate at 1% (bank prime 3%). Most analysts expecting this form the Bank of Canada Governor, but what was surprising is how little Canada has to do with the global financial crisis.

He continued to reinforce that the key factors continue to be the crisis in the EU, which is now looking like its heading into a recession, and high US consumer debt.

Click here to watch the Globe and Mail video.

Bank of Canada could slash interest rates next year

Sheryl King, an economist at Bank of America Merril Lynch, said in a note that the volatility hitting Europe and the risk of damage to the global economy means the Bank of Canada will move to cut its benchmark interest rate to ward off the risk of recession.

With the Eurozone sovereign debt and banking crisis showing no sign of containment, some economists think the Bank of Canada will cut rates back to the effective lower bound of 25 basis points (0.25%) early next year.

Click here to read the full article in the Financial Post.