According to a survey the time, which the America refers to as the great recession, badly affected the US real estate. An estimate is that one out of every five hundred houses went into foreclosure process. It is the consecutive fourth year and there are still no signs for the USA real estate market getting any better. However, on the other hand, the Canadian real estate market has been doing great. The Canadian banks showed no failure even in the great depression hit. Amazingly, the delinquency rate of the mortgages in Canada is less than one percent. The question is how Canada came on top in the real estate when the whole economy is going through recession. The first thing, which is understandable, is the way their banks performed. They used a strategy where the chances of loss were minimal. The banks in Canada lend money to those who people, whom they thought will be able to pay it back. It sounds simple.
However, it requires a great responsibility at the end of the bank to conduct a proper enquiry for each individual who applies for the loan. The best part is that it showed results. If you compare the real estate of USA with Canada, the agents in Canada are not as busy as compared to the agents in USA. The difference in population is also an important consideration here. Canada has only recorded population of 34 million only, while USA has a population of over 307 million. However, when we compare both the markets, the economy is also an important factor. USA is ranked number 1 in the world’s economy, while Canada is only 9th. Considering all the above factors, it is obvious that adopting the standards, which the Canadian banks have adopted might not be as easy and simple for USA banks. But one thing is for sure, that the Canadian Regulatory system of Banks has proven to be very effective especially for their real estate Equity investment market. Another important factor is that the Canadian homebuyers do not get any write-offs on taxes like in USA.
The only thing a Canadian homebuyer receives on buying a property is capital gain tax exemption. Therefore, as there are no mortgages interest deductions, the Canadian have to quickly pay down their mortgages. Another important factor is the non-recourse loan. The Canadians homeowners are required to pay off the mortgage debts even if they have lost the home. This way a homeowner cannot get away from any real-estate loan debt. These strategies, which differ in the Canadian real estate, can be a great lesson for the USA real estate. The fact that Canadian real estate has performed a lot better than the USA real estate during the last few years proves that they must be doing something right. Whether it be the banking strategies or mortgage regulations, the experts should analyze and compare both the markets and see what is there to adopt from their strategies.