Given such a scenario, some first-time buyers may be tempted to hold off on what’s likely to be one of the biggest purchases of their lives, though that may be a mistake.

Judith Cane, president of Antara Financial Group, said she has just advised a first-time buyer to get into the market.

They had been renting for four years and when they calculated how much they had been paying out, they decided they didn’t want to wait another year, Cane said.

“I am of the mind that it’s always good to buy,” said Cane, whose fees comes from clients paying for her advice and not from commission on the sale of financial products. “People may have to lower their expectations about what they can afford, but it’s better, especially if you are younger to put your money into buying rather than renting.”

About two-thirds of Canadians currently own their own homes, with men more likely to be homeowners than women at 69% compared with 63%, according to a recent BMO survey. Those least likely to have taken the plunge were in the 18 to 34-age bracket, where only a third were homeowners.

“If you have the opportunity to get into the market, it’s a great time to buy,” said Laura Parsons, a mortgage expert at BMO. “In many places it’s a buyers’ market.”

“There are a lot of renters out there and it’s very lucrative to have a rental property,” she said, pointing to rising Canadian rental prices.

According to the Canadian Mortgage Housing Corp. the average monthly rent for a two-bedroom place was $864 in April, up from $848 in April last year.

That price rises to $1,181 in Vancouver and $1,124 in Toronto, Canada’s costliest cities.

With interest rates currently so low, on the purchase of an average $300,000 property, mortgage payments are unlikely to be that much higher than rental payments.

A fixed-rate mortgage of 5% and an amortization period of 30 years would put monthly mortgage payments at $1,521.02. Adding in property taxes monthly payments are likely to be about $1,771.02, according to figures supplied by BMO.

If a monthly rental of $1,200 increases by about 5% a year, after eight years your mortgage payments will be less than your rent, BMO says.

> Cane said the main argument in favour or renting over buying is if you are highly mobile and plan to be in a location for less than five years. Then renting is probably the best option.

http://money.canoe.ca/money/business/canada/archives/2011/07/20110721-082454.html

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In other words, Canadian homeowners are unlikely to experience what U.S .have underwent in terms of the decline of their home value.

“The relationships between average price and income has recently been cited as portending a U.S.- style correction in Canadian home prices,” said Gregory Klump, chief economist for CREA.

Home prices tend to perform well in the market in accordance with periods of sharp growth periods of stability. By contrast, income generally follows an orderly upwards trend over time.

Winnipeg REALTORS® president Claude Davis said the Winnipeg market is more characterized by the term “slow but steady.” In addition, it is known to be one of the most affordable markets in Canada which is not prone to accelerated price increase unlike Calgary, Vancouver and Toronto.

“The Canadian housing market is now widely thought beat, or very near, the top of a cycle,” said Klump, “and the ratio of the home prices to incomes is currently high. This ratio will revert to its long-term average as it always does as part of a normal housing market cycle.

“History suggests, however, that it will not do so by means of a significant correction in home prices,” he added. “The more likely scenario is that home prices will stabilize, giving incomes chance to catch up again.”

Conservative lending practices in the mortgage industry combined with prudent borrowing and accelerated payments among Canadian mortgage holders have been seen throughout the recent housing market cycle.

Accelerated accumulation of home equity will provide options for the small proportion of homeowners who may face financial difficulty when their mortgage is renewed at a higher interest rate. Their trends are expected to help Canada avoid a U.S.-style housing crisis.

The unwinding of the housing boom in Canada will be more orderly, characterized by softening sales activity and stable prices, according to CREA.

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