Could new mortgage rules pop housing bubble?

Yes, we are at the Tip of this Housing bubble. Why does the Real Estate industry and the media think Canada is different from the rest of the world?
The cycle is always the same, going up or coming down. Starts in the US, then Ontario/Quebec then west to BC/Alberta. The time lag is usually 18 months to 2 years. Cheap money is creating another bubble.History repeats itself. This time in no different.
Alberta just announced a $4.7 Billion deficit for 2010/2011, and expects a deficit in 2011/2012.
The US$ was supposed to roll over and die. Greece is in financial trouble, the Euro is coming under pressure, this will boost the US$, hurt commodities. Canada is a commodity driven economy. especially in BC and Alberta.
In the early 90's our Real estate boom continued a few more years longer due to the money coming from Hong Kong. This time its hanging in a little longer due to money coming from China.
In China speculators are buying empty houses in ghost cities to gain from their boom, a recipe for disaster. In Canada how do you make a house "affortable" extend the mortgage to 30,35,40 years.
Ask the bankruptcy and repo business. Business is already booming for them.
Are we there yet? We are really close.

http://arewethereyetbd.blogspot.com/

PIGS......

SOME would add Italy to the list???

Loose your inferiority complex and stick with the facts. Don't invent your own.

What housing buble? We are finally starting to see some growth and they want to make it more difficult for people to buy a home, that dosen't make sense. Its already hard enough, I'm a mortgage broker and I am not getting the bussiness I did even 2 yrs ago. Before you could of bought a house with nothing down and a low beacon score, people deserve a nice place to live and that will kick start the economy as well as job creation and I'm talking about good paying jobs not part-time at minimum wage, thats what the government should be focusing on, not some imaginary bubble that at this time is pure speculation.

Depends...not all of Canada is the same. See Alberta for example, it was near impossible to find a home to rent in any city from 2006 to 2008. Things are now picking up and will be in full steam again within a year. Will it be fair to have people living in campgrounds or on the street, people who have full time jobs because there are no homes to rent and rent costs become disgustingly insane. I think affordable housing may be of help, not making it near impossible to buy a friggin home. Heck the average cost of a home was around 360,000 in Edmonton a couple years ago. Who has 36 thousand sitting in there bank plus all of the other costs (lawyer fees, furniture, home inspection etc).

The fundamental problem is the ratio of consumer household debt to GDP. This ratio is a measure of how much debt a family can carry relative to how healthy the economy is. In the US, the meltdown started at 120% and was in full fury at 130%. In Canada, today, the number is 142%.... we are waaayyy past the Yanks. Sorry folks, but it is meltdown time. The feds should have stepped in long ago to limit mortgage exposure, but it is too late now.

The rates in the US, which effectively set the Canadian rates, will be low for a long time to come. Canada cannot raise without hurting manufacturing and exporting even more. Meaning, that the bubble will build whether we like it or not. But will the bubble burst? Well, for the globally fiscal challenged and debt burdened, which is the majority of the world GDP-wise, inflation is the likely saviour. Same debt, higher tax base. So, expect real estate to climb and stay there as wages lag by a few years. Nobody said it has to be fair, it's just how I see it evolving.

“The banks in this country don't have to lend to the limit of the law – they can make smart rules on their own and not have Minister Flaherty make the decision for them"

Spoken like a true Wall Street financier.....

"Before you could of bought a house with nothing down and a low beacon score, people deserve a nice place to live and that will kick start the economy"

Sorry, but building houses does not form the basis for a sound economy. Population growth without growth in the associated sustainable industries supporting it, is a recipe for economic troubles a few years down the road. That's a service industry. I seems some of us still want to put the cart before the horse... the problem is, you can't steer it and it'll jacknife on you. How's that for an analogy?

George: Hopefully Housing's voice is as nice as his brother's, Michael.

housing will pop, just give it time, it popped everywhere around the world, the Canadian government has done a wonderfull job at holding up inflated RE with teaser interest rates and other radical policies..they will end, when they do, housing will deflate to affordable levels..geared towards affordability that comes from income not low rates. Just wait and see...too many dummies have now become bank slaves for 35-40 years..although I'm all for it, I need my bank dividends to increase..just keep paying people..heyyyaaaawww.

When pople learn to spend less than they make we will have no more credit chrisis.

Save up, make due... And pay cash

No one wants to APPEAR to have less than the other guy who is mortgaged up to his eyeballs.

Yes, Bubba is bubble and the bubble will eventually bust. I know quite a lot of people who frauded the govenrment with welfare checks and bought houses: the seven deadly sins. Canadians are not
much different from Americans, so Americans led and we follow. Get out of the housing bubble now
if you still can!

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I am a realestate broker in quebec. I was around for the dramatic increase in housing prices in the early 00's. I remember selling a highranch bungalow for 87,000 and thinking the buyer didnt really get a very good deal. After the housing boom (3-4 years later) I got a call from that former buyer and we sold the same home (no renovations) for 170,000. Those are the type of gains were talking about all over the country.

Around 2008 with the market crash, housing prices should have come down... alot. They didnt in my area and certainly not enough in others as they should have. I remember thinking this doesn't make any sense. The average salary in canada did not double in the last 7-8 years so how are all these people able to afford double the prices. What happened was zero down financing was introduced, followed by 40 year mortgages. Can you believe that... The banks sensing their own collapse artificially propped up the market by finding new ways for buyers to``qualify`` for a home loan.

After allowing the banks operate like that through pretty much all of 2008 the federal government stepped in and eliminated the 0% down loans and reduced the maximum mortgage length to 35 years. There was some talk that this could also precipitate a snowball effect of housing price decline... it didn`t. To small of a change i suppose. The federal government was said to be on board with reducing the maximum mortgage length to 30 years at that time from 40 but ultimately opted against it. The thinking goes that home buyers who were currently in a 40 year mortgage with a 5 year fixed term would need to refinance at 35 years if their hope was to maintain a monthly payment similar to what they had already been paying. If we include the likely hood that these record low interest rates are unsustainable then in 2013 when these same folks who took 5 year terms at 4.5% are faced with refinancing at 5.5% or higher and based on a 30 year mortgage... banks would be looking at a real jump in defaults which would further depress the market.

When you factor in the cost of buying a home in todays market compared to what you could have bought in the the late 90`s... its almost double the price. Throw in higher gas, insurance premiums and groceries it truely is an expensive time to be alive.

This is unsustainable. Unless there is huge government intervention I am looking for a substantial market correction in the next 2-3 years to bring housing prices back inline with the salaries in this country. My parents paid off their home in 25 years. I want the same opportunity to live the same quality of life... but i don`t want to have to work 40 years to do it.

What are you guys fighting about? 2+2 is 4.. %90 of Canadian are leaving on their credit cards. They can not save money for downpayment %10 downpayment for an avrage home in Vancouver is $50.000. saving this much money with $10-$12 an hour income?You must be kidding .So what we will get? houses with no buyers.So market not only cools off, it would die. he best thing to do now: Wait and watch.

"We have little choice but to take part in economic slavery.Our basic need for shelter must be provided by market forces supplying our homes to us for as much profit as the market can bear. These homes are not built for you to “live” in ,they are built for you to sleep in after work. They have no means to make energy, there is little or no facility to grow your food. Instead our food is flown in from around the world, manufactured on an industrial scale using the cheap labour of other Peasants in other lands. Our energy is suppllied by hugely profitable multinationals at great expense to us and the Earth. Even the supply of water makes vast profits. Our lives have been reduced to a collection of utility bills and what we do to earn money."
http://landlesspeasants.org

The market will go down and actually has started. What is happening is homes in the 300-500 range are selling quick and increasing in value. But homes over 700 are not selling well and are going to start coming down significantly (already has a bit). If you can take a profit on your home get it out there now while people are still paying the inflated prices.

A 250,000 t+ home is out of reach of a lot of Canadians. That being said, rent that is higher than a mortgage payment would be, is quite common where I live. If they can make a rent payment higher than the mortgage would be every every month for years why shouldnt they be considered a good risk to purchase a home?
it will soon be that the average worker can never afford to buy their own home. The rich are getting richer and we might as well go back to the landlord and peasant now instead of going through this slow errosion of the middle class.

As a Mortgage Broker and Realtor I can assure you we are at the near bottom of housing prices-- it will look like that in 3 years, oil is set to boom again as well as all resources in Canada. Most people with jobs can easily afford $300K purchase prices as first time buyers and with only 5% down, home ownership is a reality for most. For people crying about the rich getting richer?? Go back to school, upgrade, take some responsibilty for your own situation, haven't you heard of the Mathew Effect? (google it)

Banks.... "they can make smart rules on their own "

Aren't we presently dealing with the results of the bankers own "smart rules"????

A Mortgage @ 3x annual wage, 25 year max. Because believe it or not House prices can go down as well as up & interest rates WILL go up eventually. (taxes have to go up to cover this Debt).

It's a cycle like anything else and common sense says exactly whats being said above. As long as people haven't maxed themselves out on a cheap mortgage, they should get by just fine with an adjustment. Contrary to our Yanky friends whom were able to purchase a house on "good faith"; was quite a ride for the short-term. As long as the cards are played properly, there shouldn't be a huge loss in Equity. Still good for the real estate investors whom rent out units, the rent cost usually don't decrease. Guess it's time to review the plan.