Obsession with fees ‘unhealthy’ for Canadian real estate in the long run – analyst

Among the under-discussed aspects of the Canadian housing industry’s part in the national economy are the fees associated with home purchase and sale transactions. Which by any measure outstrip the combined contributions of the agriculture, fishing, forestry and hunting segments.

According to Statistics Canada

Industry fees such as inspection costs, legal expenses, land transfer taxes, and real estate commissions constitute 1.9 per cent of the gross domestic product (GDP). Meanwhile, the agriculture, forestry, fishing, and hunting industries constitute 1.6 per cent of GDP.

“It’s really concerning, it’s really unhealthy,” Macquarie analyst David Doyle told CBC News.

Are ultra-low interest rates the cause?

Doyle noted that the strengthened influence of real estate fees on the national economy can be traced to the prolonged reign of ultra-low Interest Rates. The analyst warned that serious negative consequences of these developments are just beyond the horizon. Especially with the central bank beginning to increase rates once more.

Drag on the economy

“The drag on the economy that’s going to flow from [higher interest rates], I think, will prove to be much more severe than it’s been in the past,” Doyle stated.

The economy is more reliant on housing

“The economy is just that much more reliant on housing and in particular on these ownership transfer costs,” he added. “It’s not something that, as an economy, you would look at as a position we want to be in.”

How can we help you?

There are many costs associated with buying a home. At Client First Mortgage Solutions our experienced Mortgage Advisors will explain all of these costs and hopefully be able to save you money by getting you an industry leading interest rate. Click on the link 10 Closing Costs when buying a home to learn more, and then contact Steve and Nathan today!

Original Article – Mortgage BrokerNews.ca – August 1, 2017