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Old Posted Apr 9, 2012, 8:17 AM
osmo osmo is offline
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Join Date: Nov 2005
Posts: 1,600
The whole "chinese" factor IMO is a overblown stunt proped up by the RE players and the media. Nobody can get a concrete number into how much their money influences prices. Some estimates say only 5-10%, which is not much. I agree that RE is heavily local and some markets are complete stink shows like Kelowna. I do believe price corrections will be seen across the board simply because the majority of Canadians leveraged them selves to deep. Just by numbers how can Babyboomers expect to come out of RE in the clear? Whom will by there homes when they represent such a large block of wealth I won't be ad even if al m peers did numbers don't add up. RE ad the media will point to "immigration" and "chinese money" but last time I checked when my parents moved here from overseas the last thing we did was buy a home lol. So with that the speculative money that has been pouring in well eventually like all speculative plays burn out. The truth is that a major correction stands to hurt Canada more-so than it did America. Places like BC have 30% of their economy tied to RE. Canadas GDP has RE taking up 15-17% - far from small numbers. The USA never was close to those levels aside from banana states like Arizona and Nevada.

Assets can't rise at the levels forever. I am young but I do remember Bre-X and Nortel and the stories told of how delusional people were to think they would stay bullish for ever.

I agree tho that its impossible to gauge when prices will fix them selves. The Govt is to chicken to act on the mess it created. Buyers have been making it known what they feel about the market as sales have been have been negative in the majority of CDN centers - yet prices still rise? Places like Kelowna and Victoria will indeed get hit the hardest (and first IMO) then you just have to play it by ear market to market. To cool things down eventually Carney will have to act on what he has been warning about (household debt levels are to high) and tweak interest rates, or Fed regulators will have to step in. There is talk that regulators will put foward a rule that if your home is in negative equity you won't be able to re-finance unless you pay the difference. They want to end double loans that are common in goofy markets. Its a drastic (Emperor Harper will likley try and weaken it) but much needed play tho to cool things off.
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