Biggest Housing Bubble In The World In Canada

[ByeBye49 161]

thought it was gonna be a big bubble with houses in it 

[Computer 10,980]

well for starters our banks didnt fail like in most of the world in the 2008 financial meltdown...

As a result, credit didnt freeze here, and banks kept lending, and because interest rates were lowered, prices kept rising despite a weakned economy.

Unlike most Countries, we never got a housing correction during the recession. We had a mild drop in 2009. That was the only year in the past 14 years that prices went down even a little

Of course, our banks are by law required to have higher amounts of cash reserves in case stuff goes wrong than most Countries... Also lending standards are strict. We can only have max amortizations of 25 years, you must have a good credit score and income, and minimum downpayment without insurance is 20%

Because we dont have bad loans and our banks are healthy, the system has been able to handle the big imbalance so far. But if rates stay low, banks keep lending and prices keep rising, i dont think our financial system as good as it is will be able to handle it much longer

That's really interesting... yeah we had that perfect storm of everything crashing systemically in the US. And as bad as it was, it did give us a needed housing correction.

A lot of people here were acting like housing itself should give you a great return like stocks/equities would. But that would only hold true as an overall business plan if you're managing property that generates rental income. Property value itself should only ever rise along with inflation.

That's why I think that as long as property values compared to median income are in line with historical norms the situation could be okay. Otherwise it definitely will need a correction.

This will be interesting to watch. And I hope any correction is gradual but it doesn't seem like corrections are ever gradual in any market. Once people get a whiff of it 100% of speculative demand evaporates and the effect cascades.

Will be perched...

[Economy 53,133]

That's really interesting... yeah we had that perfect storm of everything crashing systemically in the US. And as bad as it was, it did give us a needed housing correction.

A lot of people here were acting like housing itself should give you a great return like stocks/equities would. But that would only hold true as an overall business plan if you're managing property that generates rental income. Property value itself should only ever rise along with inflation.

That's why I think that as long as property values compared to median income are in line with historical norms the situation could be okay. Otherwise it definitely will need a correction.

This will be interesting to watch. And I hope any correction is gradual but it doesn't seem like corrections are ever gradual in any market. Once people get a whiff of it 100% of speculative demand evaporates and the effect cascades.

Will be perched...

One advanrtage we have is that were considered to have the best banking system int he entire world. Weve won that several years in a row. Our banks and financial system the way it operates is very difficult to bring down

 

Thats why when the US collapsed, even though were more dependant on trade than most Countries, we still resisted better than Europe and stuff

 

But even our financial system has its limits so we will see

 

rates going up slowly and no bad loans is an advantage. so hopefully the correction will be gradualll... i hope

 

As for the US housing crash, i feel like the downward spiral was made worse due to irrelevant factors such as oil prices surging in 2008 at the worst time possible which created additional economic pressure, and other Countries like in Europe also collapsing due to their own imbalances. So other factors were at play

[LoyalMonster 53]

I also thought this was going to be about some house in Canada covered in a giant bubble.lol