Archived Articles

Simeon Mitropolitski is a Canadian analyst, of Bulgarian origin, and a former syndicated columnist with the Bulgarian News Agency (BTA). He is the author of several hundred articles dealing with hot political and economic topics, both national and international.

He was part of the first group of Bulgarian intellectuals and students that began the opposition movement that finally put an end to the communist regime in this country in 1989, and in 1996-1997 participated in international observation teams during the elections in several Balkan countries - Romania, Albania and Bulgaria.

In 2002 Simeon and his family moved from Bulgaria to Canada where they live now in Montreal, province of Quebec. Simeon is a Master of Political Science from McGill University and a B.A. of Political Science and History.

Global Real Estate Project
News Index

Directories
  Int'l Realty
  US Realty

The prices in Canada are up so the main bank interests are expected to follow suit. This will mean an end of the recent holiday on the real estate market that some have predicted would last for years ahead. 2002 was a year of records in many areas in terms of price levels, housing starts and mortgage market development. The lack of even brighter economic forecasts for 2003 and the fear of bubble burst in some sectors give reason for the moderate market pessimists. In times like this the main strategy, both for the developers and for the banks should be to limit the risks of excessive market exposures. They should also look for new trends of migration and population movements, and locate the remaining pools of disposable income ready to be invested in the market.

The low bank interests rates coupled with the positive migration influx, stable economic data and political stability have all contributed to the good real estate market performances in Canada in 2002. The housing starts during the last year were 205,000, an increase of 25% compared to 2001 (the most remarkable annual increase since 1983). Some analysts in late 2002 even predicted that such upward trends even at a smaller scale could continue for years to come, while some others pointed out at the growth potential restraints. The reality so far shows that the moderate pessimist point of view has a more solid ground beneath.

The downward market trend began during the winter months but the harsh weather wasn't the only reason for that. The Central bank of Canada has warned that the buyers' holiday may be soon over and that the interest rates couldn't be maintained at this low because of the growing inflation. The pool of families with disposable incomes that seized the opportunity to buy on low interests is shrinking and the adequate replacement isn't in sight. The new big wave of immigrants that has entered the country since the mid-90s is still paying rents. Given all that it would be highly unlikely to see 2003 repeating the great market result of 2002.

When the market is promising, the investors are rushing in, but when it starts to crack, there is a real danger of massive outflow, inflicting more damage for the investors than the planned retreat. Some Canadian cities in the past have experienced the phenomenon of market deflation and the investors won't be enthusiastic to go through it again. The holiday may be soon over but the life will go on even between the holidays. Even with higher interest rates the market could be maintained for a while by stimulating the demand.

In time of flat growth or worse it shouldn't be left only to the market forces to fix the situation because it could soon go beyond any control. The government and the municipal authorities can increase the pool of families with disposable incomes by lowering some taxes (e.g. municipal taxes) and by providing the first-home buyers with some additional tax deductions.

These authorities by appropriate programs should face additional task of convincing the potential buyers to go on the market, because many tenants just haven't sufficiently cultivated a mentality of owners.

--------------------

See also the directory of companies providing real estate services in, and general real estate information of Canada.