Mortgage rates are at historic lows and are predicted to stay low for some time to come. The end result is good news for the real estate market, in both resale and new homes. Recent reports outline just how good the news has been:

The Canada Mortgage and Housing Corporation (CMHC) is predicting that new home construction will increase in the latter half of 2009 and into 2010. They are expecting housing starts to reach 141,900 units in 2009 and improve to about 150,000 in 2010. These numbers are still far off the mark of 200,000 or more that the market has reached every year since 2002, but they are a clear sign that the new home market is regaining strength. Most experts predict that we are not likely to see housing starts in the 200,000 range again, since there is less demand. As the market stabilizes, 170,000 starts per year will probably become the new norm. Even the luxury market is bouncing back. The Globe & Mail recently reported on the Vancouver market, noting that in the spring of 2009 houses sold in the city for $10 million and $9 million. Victoria saw two sales in the $6 to $7 million range. Canada’s most expensive residential real estate deal of 2009 (at the time of writing) occurred just outside of Calgary, as the Falkridge Centre sold for $13.1 million. Another sale in the city of Calgary netted former Calgary Flames goalie Mike Vernon $10.3 million. Not to be outdone, the city of Toronto posted its strongest performance ever in the luxury market in May, 2009, with 273 high-end homes sold. Low mortgage rates are the reason for the huge 18% increase in resale homes sales, year over year from July, 2008 to July, 2009. Major lenders announced another cut to mortgage rates in early September, 2009. Rate cuts will help maintain strong home sales in all sectors of the market, from small condos to the luxury homes discussed in the previous point. Along with low mortgage rates, low inventories of resale homes have helped boost home prices and are, in part, responsible for the uptick in housing starts.

There is also good news for sellers, if not necessarily for buyers, at least in the Toronto market. There is some serious competition for housing, which has marked a return to bidding wars over resale homes.

If you are looking to enter the market, whether you are a first-time buyer or a current owner seeking to upgrade to a bigger home, be sure to get off on the right foot. Securing your financing is an essential first step. When you know how much you can afford, you can tailor your search for a new home accordingly. A meeting with a mortgage professional can help you analyze your current income and expenses so you can determine exactly how much you can spend.