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A recent report published by Canwest News Service (Oct 18, 06) on real
estate trends indicates that steadily rising home prices and the recent
upward drift in mortgage rates are tilting the economics of housing back in
favor of renting over home ownership. The Scotia Bank Group reported back
in mid-October of 06, that the difference between the typical monthly
mortgage payment on an average resale home in Canada and the average
rent on a two-bedroom apartment is currently over $800.00, up from
$575.00 in 2005 and as low as $250 per month in 1997. “This brings the
affordability gap between the two competing accommodation choices back to
levels not seen since 1990” according to the report.
Relative price trends in recent years have consistently favored renters
over homeowners. The report said that between 2000 and 2005, renters’
shelter costs increased at an annual average rate of 1.3%. Homeowner’s
cost, on the other hand, had risen an average of 2.7% yearly. Rising home
prices have been a major inflationary factor, but homeowners have also
faced larger increases in insurance premiums and maintenance costs.
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