# Is the sky (roof) falling?



## fifi (Apr 3, 2009)

Quite a bit of news today about the possibility of a real estate bubble ready to burst in a number of big cities. Living in Calgary, it has been incredible growth over the past few years. As mentioned in the herald today:

_Before 2000, house prices tended to hover with a narrow range of between three and four times provincial annual median income. Today, house prices are anywhere from 4.7 to 11.3 times the median income, says the report (Canadian Centre for Policy Alternatives). _

Yes, yes, it's just a report, but inventories are high, some reports of people starting to struggle with mortgage payments, relatively high unemployment, etc...honestly, it has me reconsidering the house-hunting we are currently doing (which would move us from a ~500k home to ~650k home to be closer to schools, work, public transportation, etc). Maybe I should save up some more and see how things pan out over the next year rather than taking on a 150k mortgage...

What is your crystal ball saying?


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## Jungle (Feb 17, 2010)

My crystal ball is saying do not buy right now, there is a correction occurring. If you do not plan to sell or buy in the future who cares, pay your mortgage off, live and die in your house.


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## tinypotato (Jul 27, 2010)

I'd hold off on a purchase right now (for most parts of the country). No point buying after a huge run up when negative headlines are just starting to come out.

Sales volumes are also way down in big markets like Vancouver. Prices haven't moved...yet....

That being said, I've been wrong for a couple of years now....!


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## Jon_Snow (May 20, 2009)

I'm kinda torn on this... on one hand, as a property owner in Vancouver it would really hit my net worth statement hard if there was a big real estate correction. But then again, a big crash would mean that we could finally get into a detached house with a yard for less than the ridiculous 700k it costs today. Still don't know which situation I'd prefer....


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## sags (May 15, 2010)

Please tell me that the prices listed for the Vancouver homes in the link are a joke.............................

http://www.crackshackormansion.com/original.html


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## Jon_Snow (May 20, 2009)

Sadly, its not far from the truth.....


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## CanadianCapitalist (Mar 31, 2009)

Prices have already corrected somewhat from the peaks set in Spring this year. In our Ottawa neighbourhood, *asking* prices are off about 6% and homes are staying in the market longer. 

I don't think anyone can time the housing markets either, so if one has a healthy downpayment and can easily handle the mortgage and all the expenses that come with owning a home, they may want to go for it.


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## kcowan (Jul 1, 2010)

To OP, the common advice is to upgrade in a down market. Because Calgary is going through a down period, this might be the time to upgrade. If house prices correct another 25%, your current home will the worth $375. But the upgrade will also be less.

The only other action would be to try to sell and then rent in the new neighborhood. But that might compromise your life choices too much?


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## Square Root (Jan 30, 2010)

I have been pretty negative on RE since the crash of the early 90's in Toronto. Good place to live but don't like it as investment. I think some kind of correction is coming but who knows. Might just be a plateauing. Our place in Canmore is probably down 10% from mid 2007(the peak). I wouldn't be buying right now unless you know....a great place for a seemingly great price.


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## fifi (Apr 3, 2009)

Thanks for the advice so far; point well taken about the parallel fluctuation in price in both my current and potentially-future-home...As implied in my comments above, I feel hesitant about the market in general, so looking to hear other points of view!


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## Jungle (Feb 17, 2010)

kcowan said:


> To OP, the common advice is to upgrade in a down market. Because Calgary is going through a down period, this might be the time to upgrade. If house prices correct another 25%, your current home will the worth $375. But the upgrade will also be less.
> 
> The only other action would be to try to sell and then rent in the new neighborhood. But that might compromise your life choices too much?


Challenge is:
1. Are there buyers out there right now in a down market? 
2. Out of this pool of buyers, how many can/will spend $500,000 in a down market?
3. Is the OP willing to accept that he/she will have to price lower than market value to catch buyers if market keeps falling? 

Not an easy choice. Good luck.


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## Scottlandlord (May 27, 2010)

I think the Ontario market is fine. There are lots of safe-guards in place, including new rental rules that will chill speculation.

I dislike politics, but Rob Ford will do away with the land transfer tax. That will ignite the Toronto condo market.

We also have some new immigration trends to Toronto and the GTA. Vancouver is simply so expensive that lots of wealthy Chinese emigrants are now coming to the GTA...good news for all of us.


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## GeniusBoy27 (Jun 11, 2010)

I don't think the presence or absence of the land transfer tax will ignite the market. Simply put, it didn't have a significant impact with the new tax, except to shift some of the buying prior to the land transfer tax. If it does have an impact, great. As you said, the loss of speculative effect will hurt prices.

I think the underlying fundamentals of a slowing economy, a slow return to more normal interest rates, and also the cyclical housing correction means that prices aren't going up anywhere soon.


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## Square Root (Jan 30, 2010)

Scottlandlord said:


> I think the Ontario market is fine. There are lots of safe-guards in place, including new rental rules that will chill speculation.
> 
> I dislike politics, but Rob Ford will do away with the land transfer tax. That will ignite the Toronto condo market.
> 
> We also have some new immigration trends to Toronto and the GTA. Vancouver is simply so expensive that lots of wealthy Chinese emigrants are now coming to the GTA...good news for all of us.


Wishful thinking I suspect.


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## andrewf (Mar 1, 2010)

For a number of reasons I doubt we'll see a spectacular flame-out like we saw in Arizona, etc. But I don't think a 10 - 20% decline is out of the question. I think 3 or 4 years of price stagnation is probably more likely. As rates rise, affordability will worse, and prices are already fairly high. I can't see major appreciation from here.

On the bright side, Toronto has pretty solid long-term fundamentals. There's a high population growth rate with the immigration influx to absorb new units and the economy is pretty solid and well-diversified (no, it's not all car manufacturing). So the trick is guessing the short term fluctuations, and I think that requires a crystal ball.


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## canadianbanks (Jun 5, 2009)

Scottlandlord said:


> I think the Ontario market is fine. There are lots of safe-guards in place, including new rental rules that will chill speculation.
> 
> I dislike politics, but Rob Ford will do away with the land transfer tax. That will ignite the Toronto condo market.
> 
> We also have some new immigration trends to Toronto and the GTA. Vancouver is simply so expensive that lots of wealthy Chinese emigrants are now coming to the GTA...good news for all of us.


Nothing will ignite the Toronto's RE market. Here are some stats for all wondering if there will be a correction.

Toronto (416) - May 2010 - $493,265
Toronto (416) - Mid-August 2010 - $425,874

Toronto (416) is down $67,391 or 13.7% since May 2010

GTA - May 2010 - $446,593
GTA - Mid-August 2010 - $412,934

GTA is down $33,659 or 7.5% since May 2010.

May 2010 wasn't that long ago either.

We are already in correction folks and predictions from bank economists and the like, that we'll see single digit correction from peak to through are laughable at best.

Here are the sources for my calculations above:

http://www.torontorealestateboard.c...et_news/news2010/pdf/nr_market_watch_0510.pdf

http://www.torontorealestateboard.com/consumer_info/market_news/news2010/pdf/nr_mid_month_0810.pdf


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## andrewf (Mar 1, 2010)

Is that the National Bank index? You have to be careful with average home sale prices because some indices use methodology that gives you a distorted view of average home prices.


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## fifi (Apr 3, 2009)

canadianbanks said:


> Toronto (416) is down $67,391 or 13.7% since May 2010
> 
> GTA is down $33,659 or 7.5% since May 2010.
> 
> ...


Thanks for the figures; I can see that depreciation of home value is occurring out west as well, but don't have the stats to back it up more than just anecdotally (I'm sure they're out there though). No doubt some correction is happening, and although I know that catching prices at the bottom is like catching a falling knife, any info shared is worth looking at.
Thanks again for the continuing thoughts!


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## GeniusBoy27 (Jun 11, 2010)

I just want to point out one note of caution in looking at average house prices. It's the old fallacy of looking at statistics. I think using average house prices are dangerous, because the only true comparison would be an equivalent house in the same location, what is its change in value over a specific time period (say, a year). However, a number of factors may change an average house price comparison easily, such as one sector of the housing market being favoured over another sector.

For example, if the condomonium re-sale market took off last year, but the single detached homes took off this year, I'd expect the market to have gone up rapidly on the "average price".

Similarly, if one area of the city with small homes took off this year, it may artificially depress the prices. So I'd take a look at "price" factors as only 1 aspect, especially when you don't take seasonal effects into account.

The year over year comparison is slightly better, but it's still cross-sectional snapshots. It's truly not the "apple to apple" comparison. The only way is to put the same house on the market, and there's no way of practically doing that.

Over this year, I think what you're saying is true, with higher housing inventories, and comparison by districts showing a stabilization, but I'm not sure the absolute correction is truly 10%. I hate it when TREB says the price has gone up/down x%. Without looking at the sectors with a finer toothed comb, the aggregate figures don't mean much.


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## canadianbanks (Jun 5, 2009)

I agree that using average price might be misleading and using median price is better however this is what TREB publishes.


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## kcowan (Jul 1, 2010)

I think the Case-Shiller index is the only one that does apples to apples comparisons to prevent distortions due to mix.


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## Berubeland (Sep 6, 2009)

The August numbers from the regional real estate boards are not at all encouraging. 

On my travels I have not seen the proliferation of for sale signs that preceded the price drop in 2008-09 before the market recovered.


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## andrewf (Mar 1, 2010)

kcowan said:


> I think the Case-Shiller index is the only one that does apples to apples comparisons to prevent distortions due to mix.


Case-Shiller is only for the US, right? That's why I was asking about the National Bank index, which I believe uses similar methodology but for Canadian real estate.

Edit: Found it-- It's called Teranet... anyway, the index is current through June 2010, and is not yet reflecting any decline in home prices for Toronto. It only compares single family houses with two sales on record, so excludes condos, new homes, etc. 

http://www.housepriceindex.ca/


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## Young&Ambitious (Aug 11, 2010)

Immigrants have always trended towards settling in the larger Canadian cities and so long as there are immigrants wanting to be Canadians I don't see demand for housing dying off. 
Ironically I was talking to my coworker about this yesterday about the housing bubble speculation and her point of view is that as long as there are wealthy immigrants coming in to Canada that a housing bubble won't happen in those major areas. 
So perhaps if it weren't for the high number of immigrants coming in we would be seeing a greater correction in the housing markets. Food for thought...


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## Scottlandlord (May 27, 2010)

Young&Ambitious said:


> Immigrants have always trended towards settling in the larger Canadian cities and so long as there are immigrants wanting to be Canadians I don't see demand for housing dying off.
> Ironically I was talking to my coworker about this yesterday about the housing bubble speculation and her point of view is that as long as there are wealthy immigrants coming in to Canada that a housing bubble won't happen in those major areas.
> So perhaps if it weren't for the high number of immigrants coming in we would be seeing a greater correction in the housing markets. Food for thought...


A great post and you are on to something big.

Many immigrants (especially wealthy Chinese) targeted Vancouver or Toronto for the past 15 years. Why? The quicker flight times. The sea. The climate. 

Now there is a new wave of wealthy Chinese emigrant. And with Vancouver being MUCH cheaper than Toronto, we have become attractive.

I'm not sure of the future of Toronto. However, the GTA has a very strong future. Look at the investment in the Markham and Vaughn areas. And the investment is going north fast.


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## Cal (Jun 17, 2009)

'Immigration has been ongoing at 225,000 people a year, which is about 80,000 families, about 20% of which are able to buy a home within five years. That’s 3,000 sales a year across the country = negligible impact.' Garth Turner

So I don't really buy your immigration theory.

And apparently you didn't see the numbers released today:

http://www.yourhome.ca/homes/realestate/article/856436--gta-home-sales-plunge-after-rush-to-buy

It was expected that the end of the year would see a decrease in sales, and average sale price, but not by that much. Hopefully the next few months will not be as bad for sellers.

Not buying your real estate 'is going north fast' theory either.


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## Berubeland (Sep 6, 2009)

http://www.vancouversun.com/business/Housing+prices+sales+slow+CMHC+says/3463904/story.html

In this story they talk about the lax lending standards that led to the US collapse. I have never been convinced that "lax lending" was entirely to blame. Lax lending refers to lowered mortgage qualifying on behalf of the borrower. 

I see what would be termed as predatory lending, a bigger problem. The banks and mortgage industry wanted to cash in on house appreciation as well. People refinancing every couple years or selling their house and cashing in before their payment balloons with all cancellation fees is a very happy situation for lenders. 

_Although most home loans are not subprime mortgages, their numbers rapidly grew in the 1990's. According to the Federal Reserve, the number of sub-prime mortgages grew 19-fold from 1993 to 2000.[6] Additionally, the large majority of sub-prime loans were made to low-income neighborhoods and to minorities. This spawned criticism of possible predatory lending practices [7] and also provided fuel for critics of the controversial Community Reinvestment Act (CRA), which promoted such lending practices. Subprime mortgages totaled $600 billion in 2006, accounting for about one-fifth of the US home loan market.[8]

As with other types of mortgage, various special loan features are available with subprime mortgages, including:

* interest-only payments, which allow borrowers to pay only interest for a period of time (typically 5–10 years);
* "pay option" loans, usually with adjustable rates, for which borrowers choose their monthly payment (full payment, interest only, or a minimum payment which may be lower than the payment required to reduce the balance of the loan);
* and so-called "hybrid" mortgages with initial fixed rates that sooner or later convert to adjustable rates.

This last class of mortgages has grown particularly popular among subprime lenders since the 1990s. Common subprime hybrids include the "2-28 loan", which offers a low initial interest rate that stays fixed for two years after which the loan resets to a higher adjustable rate for the remaining life of the loan, in this case 28 years. The new interest rate is typically set at some margin over an index, for example, 5% over a 12-month LIBOR. Variations on the "2-28" include the "3-27" and the "5-25"._

Most of the more horrible products were not allowed here, but many subprime borrowers did open up offices here in Canada which are now closed. There is a bit of a problem with orphan mortgages which are mortgages that no lender will take on. The companies that did the borrowing are not renewing these mortgages, no one else wants them and the owner of the home has to sell. One way that mortgages in Canada differ from the US is that Canadian mortgages have a term and US mortgages are made out for the length of the mortgage (25 years or whatever) Usually you have the option of just renewing without requalifying, however if your subprime company has gone bankrupt or left Canada you have to find a new mortgage. 

In Canada, the term of the mortgage can create additional problems, banks are prevented by law from issuing mortgages with a greater than 80% LTV without CMHC insurance and CMHC won't insure negative equity mortgages. If the housing market goes down too much we may create our own vortex of destruction as people with negative equity get "margin calls" upon renewal of their mortgage. 

This did in fact happen to a teacher of mine in property management school, she was asked to come up with $80,000 and had to sell her house even though she was making her payments. (15-20 years ago)

Even the people who have bought preconstruction may have problems financing their purchases if the value drops. 

Whether these things happen or not will depend entirely on if the banks decide to turn their heads, by law I'm not sure they can. For instance if someone buys a house with a 40 year 0 down mortgage their equity after five years is almost nothing, it doesn't take much of a percentage decrease in the market to put them into negative equity. 

As you see, we have our own risk factors here that could lead to a Canadian rather than US style collapse.


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## kcowan (Jul 1, 2010)

andrewf said:


> Case-Shiller is only for the US, right? That's why I was asking about the National Bank index, which I believe uses similar methodology but for Canadian real estate.
> 
> Edit: Found it-- It's called Teranet... anyway, the index is current through June 2010, and is not yet reflecting any decline in home prices for Toronto. It only compares single family houses with two sales on record, so excludes condos, new homes, etc.
> 
> http://www.housepriceindex.ca/


Yes Case Shiller is US only. Thanks for the Teranet link. Too bad it only tracks the major markets but I guess that is a limit to their methodology.

By their charts, Toronto and Vancouver look to be in double dip territory if Calgary is a leading example. Who knows?


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## Scottlandlord (May 27, 2010)

I feel the GTA is very healthy. 

And an end to the tax and waste Miller regime in Toronto can only be a good thing.


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## canadianbanks (Jun 5, 2009)

Scottlandlord said:


> I feel the GTA is very healthy.
> 
> And an end to the tax and waste Miller regime in Toronto can only be a good thing.


I agree that Toronto will be much better off without Miller, but the GTA RE market is anything but healthy.

GTA sales are down from 8,035 to 6,232 year-over-year. The average price is down from $446,593 in May to $411,012 in August - This is 8% down for 3 months. I wouldn't call the above numbers healthy


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## Jungle (Feb 17, 2010)

Just from watching the listing prices every month on MLS, units in my building are down 3-9%.


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## Berubeland (Sep 6, 2009)

HGTV is supposed to start a reality TV show where RE agents go to people's houses and do an intervention about the price and condition of the house 

http://www.hgtv.com/real-estate-intervention/show/index.html

How far we get from Flip this house in a few years...


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## Jungle (Feb 17, 2010)

Berubeland said:


> HGTV is supposed to start a reality TV show where RE agents go to people's houses and do an intervention about the price and condition of the house
> 
> http://www.hgtv.com/real-estate-intervention/show/index.html
> 
> How far we get from Flip this house in a few years...


That show has already been airing. REALLY good show. It shows you how emotional and unrealistic we can get, when it comes to placing a price on your castle.


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## Scottlandlord (May 27, 2010)

Cal said:


> 'Immigration has been ongoing at 225,000 people a year, which is about 80,000 families, about 20% of which are able to buy a home within five years. That’s 3,000 sales a year across the country = negligible impact.' Garth Turner
> 
> So I don't really buy your immigration theory.


You're an insider on what is happening with Chinese immigration into the GTA.

Dui ma?


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## Scottlandlord (May 27, 2010)

And Garth supported the Carbon Tax and told people to buy Nortel when it was over $100 (and to re-fi their houses to do it!)


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## Cal (Jun 17, 2009)

I am not an insider. That is why I quoted someone who stated the immigration stats.

If his stats are incorrect please accept my appologies, and post the appropriate statistics.


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## GeniusBoy27 (Jun 11, 2010)

On the balance of things, I also don't see how to expect that immigration will be a driving force in increasing housing prices in the GTA versus the significant impacts on the manufacturing sector and especially the auto sector (which is 25% of Southern Ontario's labour force, directly or indirectly). There is also the natural cycle of housing prices, which is correcting, and the slowly increasing Bank of Canada prime rate, affecting the variable rates.

The balance point isn't immigration per se, as much as purchasing of properties (including condos) from people outside Canada (and that goes beyond the Chinese) in the GTA. Being Chinese, I don't see the massive immigration occurring. Most of the Hong Kong Chinese who want to be here have already moved and bought houses circa the 1997 handover. It's the mainland Chinese with money that are moving to places like Vancouver and Toronto, but the ability to drive the market? Not in and by itself.

I agree there's a small correction occurring right now. If you look at the cyclical housing prices, it was bound to occur. The fundamentals show prices in the past 7 years or so are far above historic norms, but a significant crash of the housing market isn't something that the government will allow either.


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## Potato (Apr 3, 2009)

GeniusBoy27 said:


> but a significant crash of the housing market isn't something that the government will allow either.



Oh, good then, we're safe.




Berubeland said:


> In Canada, the term of the mortgage can create additional problems, banks are prevented by law from issuing mortgages with a greater than 80% LTV without CMHC insurance and CMHC won't insure negative equity mortgages. If the housing market goes down too much we may create our own vortex of destruction as people with negative equity get "margin calls" upon renewal of their mortgage.



It's tough to say for sure what will happen when people find themselves in this situation until it happens, but I doubt we'll see much in the way of margin calls. I expect that upon renewal the bank will not seek an updated appraisal, and just renew the mortgages without rocking the boat. However, I also suspect that people will lose a lot of bargaining/refinancing power if they're underwater: accepting the posted rate may become the norm.


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## GeniusBoy27 (Jun 11, 2010)

http://www.cbc.ca/money/story/2010/09/08/conference-board-housing-market-canada.html

A recent assessment by the Conference Board of Canada


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## fifi (Apr 3, 2009)

thanks for the link to the article; its great to hear different points of view on the decline of the RE market. 
I am seeing as I continue to explore MLS that many homes are starting to drop their prices much more quickly than before; perhaps a panic that they won't be able to sell it at all if they don't sell it soon? This could be seen as either an opportunity (for buyers) or a disaster (if still noone buys despite dramatic price cuts). Or, maybe just people are coming back to earth, and dropping their vision of inflated home values. If people don't re-adjust their pricing, it will sit a loooong time!
Not too keen on the recent prime rate upswing, but I'm guessing it's gonna stop at 1% for a while now.


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## Square Root (Jan 30, 2010)

GeniusBoy27 said:


> http://www.cbc.ca/money/story/2010/09/08/conference-board-housing-market-canada.html
> 
> A recent assessment by the Conference Board of Canada


Thanks for the link but story pretty vague? Not as bad as US? I should hope not. Likely that prices will drop at least 5-10% in my view.


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## Cal (Jun 17, 2009)

GeniusBoy27 said:


> ...but a significant crash of the housing market isn't something that the government will allow either.


I don't know, if the worlds biggest economy couldn't stop one, I don't know if the Canadian gov't could stop our RE market from dropping either.

Although I would love to get $8000 towards my next home paid for like alot of Americans did, when their gov't was trying to re-inflate the US RE market, I just wouldn't want to have to pay more taxes to cover it.

Related article, Seeking Alpha:

http://seekingalpha.com/article/224257-canadian-housing-another-debt-fueled-bubble?source=hp_wc


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## GeniusBoy27 (Jun 11, 2010)

But our overall economy is way better than the US. They're faced by a significant government deficit/debt as a % of GDP. We're not at the same degree, so we have significant capability to provide fiscal stimulus if required.


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## the-royal-mail (Dec 11, 2009)

GeniusBoy27 said:


> But our overall economy is way better than the US. They're faced by a significant government deficit/debt as a % of GDP. We're not at the same degree, so we have significant capability to provide fiscal stimulus if required.


I disagree. Being an exporting nation, our manufacturers and producers (many of whom rely on US biz) have taken a significant hit due to spending restraint down in the states.

Also, we are NOT in a good position to provide any more bailouts. We are about $650B in debt plus have a deficit of about $40B this year alone. Taxes are increasing all the time (HST, new user fees etc) and the many people employed in the public sector are about to take a significant hit when fed and prov gov'ts begin deficit slaying in the year/years ahead. This will have a significant impact on the economy, as all those newly-unemployed won't be spending as much money as they are now while still working. We're all very much economically related.

It only advances the cause to save your money and keep your own financial house in order. You just never know.


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## GeniusBoy27 (Jun 11, 2010)

Compared to the other OECD countries (and especially the US), we're in excellent shape. We have about $540-560 billion in debt, and a deficit projected at $49 billion this year.

Mark Carney's approach right now is to increase interest rates back to more historic norms, which should give leeway on monetary policy, if things go south quickly.

However, politically, especially in a minority government, I can't see a government (even a Conservative government) allowing the housing market to crash. It's implications on the political front are high, and I believe fiscal stimulus would be provided prior to that happening.


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## HaroldCrump (Jun 10, 2009)

Agreed with GeniusBoy27.
I think yesterday's move was in the right direction.
I'd like to see them gradually increase rates throughout 2011 to about 2% at the very least, but ideally more aggressively closer to 3%.
That will help towards containing the housing (debt) bubble.
It's really a debt bubble and not a housing one.

In the meantime, they could keep the fiscal stimulus that's already there i.e. not eliminate the deficit, but not increase it either.
This gives them some headroom in both monetary policy as well as fiscal policy.

They have to slowly correct the housing prices while awaiting job growth and general GDP growth.


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## kcowan (Jul 1, 2010)

The July negative balance of trade of $2.7 billion was the highest since 1971. This will limit our ability to provide fiscal stimulus in the long term. It also shows our dependence on the US economy.

(Edit: http://www.cbc.ca/money/story/2010/09/09/trade-deficit-july-canada.html?ref=rss)


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## kcowan (Jul 1, 2010)

> Finally, you know it’s a (US) depression when, 33 months after the onset of recession…
> 
> • Wages & Salaries are still down 3.7% from the prior peak
> • Corporate profits are still down 20% from the peak
> ...


The Big Picture
Food for thought!


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## kcowan (Jul 1, 2010)

The Big Picture


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## Scottlandlord (May 27, 2010)

GeniusBoy27 said:


> Compared to the other OECD countries (and especially the US), we're in excellent shape. We have about $540-560 billion in debt, and a deficit projected at $49 billion this year.
> 
> Mark Carney's approach right now is to increase interest rates back to more historic norms, which should give leeway on monetary policy, if things go south quickly.
> 
> However, politically, especially in a minority government, I can't see a government (even a Conservative government) allowing the housing market to crash. It's implications on the political front are high, and I believe fiscal stimulus would be provided prior to that happening.


One of the problems is that Canada is such a large country. Is the B of C really understanding the situation we currently face in Ontario with the huge debt and deficit? And the very fragile recovery?


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## GeniusBoy27 (Jun 11, 2010)

Actually, Canada is a really small country (with a population of 35 million), but to be honest, I'm sure the Bank understands the regional differences. Mark Carney has a large team of economists looking at all sectors, for signals of declines. However, the stimulus can't be regionally directed -- it has to be slightly broader based than that for political reasons.

In the near future, I expect that we'll have a stabilization of Canadian prime rates, to still provide a stimulus via monetary policy. In the longer future, I think taxes have to rise to address the debts and deficits. Part of the issue has been a continued decentralization of debt from the central government to provincial government to municipal governments without addressing the fundamental ins do not equal the outs, so to speak.


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