Tough financial times are looming over young Canadian homeowners as the housing market in the country continues to crash. However, realtors and economist assures the nation that there is no reason to panic.
The Canadian Centre for Policy Alternatives reports that in every 10 young Canadian homeowners, one will be underwater by the age of 40 due to their mortgages. Their debts will be greater than their assets if the real estate prices continue to go down in the future, CBC reports.
At present, real estate properties in Canada are believed to be overvalued by around 10 percent to 30 percent. If the market will start correcting itself, prices will go down, and with the declining incomes and rising interest rates, homeowners are set to face financial crisis, according to financial predictions.
However, economist and real estate experts believe that even with a 20 percent correction and a 39 percent decrease in the net worth of a Canadian in his 20's, he can still reduce the possibilities of being drowned in debt by the age of 40 by making the most out of his time. Wise investments, other source of incomes and compound interest can lessen or even diminish the effects of the crash in the real estate housing industry.
Reports from Financial Post reveal that the blame in the possible financial meltdown is not just on the current situation and changes in the Canadian housing market. If Canadians continue to acquire debt due to unexpected expenses and other living costs as well as their failure to keep up with mortgage payments, they can also contribute to the possible financial crisis that they might face in the future.
Time is reportedly the edge that young Canadian homeowners have to be able to delay or diminish the possible effects of the crash in the real estate and housing industry in Canada.