However, both Canada and the United States have recently held elections and there is now a clearer picture of direction and the economy appears to be responding positively. Despite what some "experts" were forecasting, the values of homes in Manitoba did not drop this year and are expected to continue to increase in value in 2009.
The doom-and -loom prognosticators make it sound like we are living in the Great Depression and that we should all stuff our money under the mattress, lock the doors and avoid all financial decisions. Nothing is further from the truth.
Cautious and smart decision-making should always be exercised, whether it be in prosperous times or not. However, if we look back a generation, we will see that times are still pretty good in Manitoba and the purchase of a new home is a sound decision.
Length of mortgage -- Many people are bemoaning the fact that the 40-year mortgage has disappeared and now the maximum is 35 years. They fear that this change reflects difficulty in purchasing a new home. If we go back a generation into the early 1980s, we see that the maximum mortgage was 20 years so, in actuality, putting together a payment plan over time today is much more accommodating to the buyer.
Down payment -- There is additional concern that the 0 per cent down payment has been replaced with a five per cent minimum, again placing more hindrances on the buyer. Going back a generation, the minimum down payment was 15 per cent. If one couldn't secure that amount up front, they had to receive approval through the Canadian Mortgage and Housing Corp.
Interest rates -- Although very few people are complaining about interest rates that hover around five per cent or six per cent, many don't realize how good times are in relation to a generation ago. In 1981, interest rates were above 20 per cent. A $200,000 mortgage back then cost more to carry than a $500,000 mortgage today (source: Canadian Mortgage Trends).
Manitoba's employment rates and average wages compared to cost of living are among the best in Canada and are projected to remain that way. Therefore, when one looks at length of mortgage, down payment restrictions and interest rates, and then compare conditions today with those of a generation ago, Manitobans live in an economic climate that is very conducive toward the successful purchase of a new home.
This column prepared by the Manitoba Home Builders' Association.
