Illegal Shady Loans Soar As Canadas Housing Bubble Refuses To Burst

[Economy 52,881]

http://www.cbc.ca/m/news/business/shadow-mortgage-lending-on-the-rise-as-house-prices-soar-1.3144317 http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/canadas-hot-housing-markets-clearly-detached-from-reality/article25373618/?service=mobile

 

Even as data suggests Canada may have entered a technical recession in the first half of 2015, the 15 year old housing boom that has seen home prices rise nearly 140% since the year 2000 refuses to let up

 

Housing starts rise to 202,000 units in June and prices rose yet again even all other sectors of the economy struggle

 

The only explanation economists can come up with is that the housing bubble is self-feeding a vicious cycle where people worry if they dont buy a hous now ASAP, they will never be able to afford one so people buy one immediately creating unsustainable demand. Low interest rates helps sustain prices also

 

As banks are more likely to deny mortages now due to tighter lendig standards, people are resorting to shadow lending from private 3rd parties. In some cases people have dipped into home equity to lend a downpayment to someone else at shark-loan rates which are not only illegal, but also dangerous to financial system.

[Miker 5,683]

I wouldn't accept any checks from Greece unless they are certified.   . Shady loans have been a way of life for a very long time. This doesn't change the fact that houses are a good investment especially when interest rates are low.

[Economy 52,881]

I wouldn't accept any checks from Greece unless they are certified.   . Shady loans have been a way of life for a very long time. This doesn't change the fact that houses are a good investment especially when interest rates are low.

well the government tried to cool the housing market by tighning lending rules and instead that resulted in more shadow lending and shady loans as well

 

now this might not be such a big deal if home prices didnt rise faster than incomes for so many years... Or if home construction wasnt above population growth for so long

 

if ppl are dipping into house value (equity) to finance downpayments for others to buy homes thats some real speculation and dangerous lending going on there...

 

if the housing bubble finally pops, it aint gonna be pretty

 

plus the economy has been stalling for some time and ever since oil prices collapsed even worse. There is no reason realestate should still be so red hot. Low interest rates obviously is a factor but then that vicious cycle they talk about may be part of it too!

[Miker 5,683]

well the government tried to cool the housing market by tighning lending rules and instead that resulted in more shadow lending and shady loans as well

 

now this might not be such a big deal if home prices didnt rise faster than incomes for so many years... Or if home construction wasnt above population growth for so long

 

if ppl are dipping into house value (equity) to finance downpayments for others to buy homes thats some real speculation and dangerous lending going on there...

 

if the housing bubble finally pops, it aint gonna be pretty

 

plus the economy has been stalling for some time and ever since oil prices collapsed even worse. There is no reason realestate should still be so red hot. Low interest rates obviously is a factor but then that vicious cycle they talk about may be part of it too!

The tendency has been for people to buy homes and rebuild or refurbish them and sell them for much more than they are worth. There are people that will pay big money for larger rebuilt homes since they can house more than one family per dwelling. This reduces the costs per person.

[Economy 52,881]

The tendency has been for people to buy homes and rebuild or refurbish them and sell them for much more than they are worth. There are people that will pay big money for larger rebuilt homes since they can house more than one family per dwelling. This reduces the costs per person.

i know the new home the build (not counting condos) are big at least in my city... Although if they fit more people then a larger number of u its being built than pop growth is an rven bigger issue...

 

but existing homes are not generally rebuilt larger. They may be renovated yes but the prices are rediculous. In Toronto average home prices of a regular detatched house is well over $1 Million, in Vancouver even worse...

 

The National Average is over $410,000 for the average unit even tho median household incomes (counting everyones income in a household) are only $66,000 as of last year i believe. That gives Canada one of the highest price-income ratios globaly...

 

its dangerous, housing bubbkes and housing busts arent rare. Big ones have happened in the US, Japan, Spain, Switzerland to name a few

 

if home prices consistantly rise faster than incomes, and construction is above what demographic growth requires, then it is not sustainable

 

of course not all bubbles burst. If a combination of right factors are in place some bubbles deflate, as in theres a gradual correction. Im hoping that happens here