Comments on: Canada’s Housing Market: Self-Fulfilling Prophesy

By: Paolo Di Petta

Paolo Di Petta — Fri, 25 Jan 2013 16:30:11 +0000

My question is why no one seemed to be sounding the bells when the media was talking up the market. For years all we heard about was the infallibility of the Canada’s Housing Market, and how we were so much better off than our american counterparts.

All this, while our debt-to-income ratio soared to 165%. Low interest and lax lending rules should mean people take advantage of them to pay down debt, right? Unfortunately the opposite has happened. That’s right, lowest historical interest rates, and highest historical debt-ratio. All this when debt should be easiest to pay down.

Low rates -> artificial affordability -> increased market competition from marginal buyers -> inflated market that will collapse if rates increase & rules tighten further.

Easy access to cheap money has driven people towards a payment-affordability based mentality instead of forward thinking one that focuses on the lifetime cost of acquisition/ownership.

THAT’S why housing isn’t affordable and our market is so out of whack and headed for a massive correction, NOT the rule changes. We shouldn’t have every had 40, 35 or 30 year amortizations to begin with.

By: Andrew Furino

Andrew Furino — Thu, 24 Jan 2013 21:36:58 +0000

Perhaps it may be best to replace rhetoric with hyperbole. Headlines sell newspapers and attract readers. I am sure the data being reported is technically correct (they have legal departments) but is it the truth? Canada was at the same risk as the US mortgage market screamed headlines in 2009…technically correct as anything is possible but far form the truth. I have been telling every one I can (both on our team and my peers) that we must tell our clients why there is a reason to be optimistic about the future. Not pie in the sky optimism but optimism supported by fundamental truths supported by factual information. Not a newspaper screamed headline. Not an opposition politician trying to score political points by blowing a minor fact out of proportion. Using common sense about your personal financial situation will always lead to the right decision. Some one needs to be positive because if all we did was take media reports to heart you might as well all watch every episode the new reality TV series “Doomsday Preppers” and prepare for Armageddon.

By: Rick Robertson AMP

Rick Robertson AMP — Thu, 24 Jan 2013 21:13:37 +0000

Thanks Boris, I believe that Ottawa had a good understanding of where the realestate market was already heading and they took the best action they could to soften the landing. I feel the source of the mis-information ‘virus’ is coming from the press, and some brokers and Realtors are infecting the general populations view through all the tweets of new headlines. Far too much of the social media content is attention getting headlines being passed along without actually reading and understanding the information. Example – The pres far too often plays up Canadian Household Debt 150% of income. That INCLUDES mortgage debt. In perspective, a household with $100k in income and $150k mortgage is not reaaly a bad situation. Let’s all not just pass on headlines because we think we need to tweet something today.

By: Lance

Lance — Thu, 24 Jan 2013 20:10:03 +0000

It’s been my long-held belief that we need to start laying charges against journalists. Now, I’m a huge supporter of Free Speech, but I also believe that folks in a position of trust have a Fiduciary Duty, and misleading the public is a Breach of Trust. Convict even one journalist and the rest will start acting more reasonsibly. The media loves to hold everyone to account but themselves. The media loves to see everyone and everything regulated – except them!!
Time to change that. We see what’s going on in the US with misinformation, and we’re heading in that same direction. Time for a course correction. Cheers!!

By: Daryl Harris, AMP

Daryl Harris, AMP — Thu, 24 Jan 2013 20:04:33 +0000

Great post Boris, doesn’t look like the Tequila affected your judgement at all, we can clearly see that government and Bank of Canada are watching the housing market very closely…stay tuned.