Posted on 05/24/2021 11:48:58 AM PDT by yesthatjallen
“Expectations becoming extrapolative.”
The Bank of Canada isn’t known for poetic flourishes but, in its description of the mania at the heart of Canada’s housing market, there’s a delightful cadence, appealing alliteration and a lot of truth.
In plain terms: Prices are soaring, in part because buyers believe they will keep on soaring. People are assuming a future of higher prices, by extrapolating from a present where prices are rising rapidly.
These assumptions are a very human tendency. But they’re also dangerous, because extrapolated expectations eventually hit a wall. The central bank, in its annual financial system review released last week, cited “imbalances in the housing market” as one of six key vulnerabilities. It also worried about “many households” now shouldering large mortgages. In the event of a job loss or other shock, their debt burdens could quickly become unaffordable.
The Bank is just the latest institution to worry about the direction of Canada’s housing market. Yet for all the concerns, there isn’t much any of this country’s policy makers are willing to do about it.
To reiterate the obvious, the market has gone bonkers. More homes were sold in March than any month ever before, and while things slowed slightly in April, it was still the busiest April ever. Meanwhile, prices keep climbing. According to the Canadian Real Estate Association, its April national home price index was 23.1 per cent higher than a year earlier. The pace of gains has gone supernova and is now far higher than previous surges in 2006-07 and 2016-17.
SNIP
(Excerpt) Read more at theglobeandmail.com ...
Anyone who’s been on the planet for a few decades knows what eventually happens when the housing market goes “bonkers”.
Same happening here, prices going up 10-30% already.
“Will the Canadian housing market impact or influence the US market?”
Not for any reason that makes sense.
“Will the Canadian housing market impact or influence the US market?”
Not for any reason that makes sense.
I’ve already been through a few of these housing boom/busts. Smart people are going to get in and out as quickly as possible. Idiots will be left holding the bag, as usual.
If people are speculating with cash they are hoping they are not the last man in line.
If people are speculating with credit as in 0 down mortgages, the public better take note because they will be the one’s holding the bag when the banks get bailed out, again.
In the first instance, I don’t give a rip how much someone loses, their problem.
In the second instance, I do, just like I do with student loans. IMO, those that make the money should be the ones that pay the piper, not some stooge taxpayer.
This is not a speculative boom, one likely to suddenly bust. The rise in home prices is driven by lack of supply in certain sectors of market. The price of starter homes, and those on the next rung, are adjusting upward as millennials who have until now been renting compete with down-sizing boomers, and foreign capital for a limited supply.
Not if they don't shut down the printing presses. Housing is going bonkers. Cryptocurrencies are going bonkers. Precious metal prices are going bonkers. Food prices are going bonkers. Biden is going even more bonkers. The RATS are determined to increase the size of the dependent class and then impoverish them. The Biden Administration = The Weimar Republic on steroids.
Canada's market has its own characteristics, but the similarities to the US are the same - an asset bubble caused by low interest rates, millenials buying homes, easy money and a financial system geared to saddle buyers with mortgage debt.
All they have to do to fix it is raise rates to 8%.
Seems unlikely...except,perhaps,for dual citizens (US/Canada).
FL housing market is booming. We closed on a new build last year Feb before Covid. Today, the base price of our home is up almost 20%. They can’t build them fast enough down here. Some builders have started lottery systems to see who gets the new units others require $5k just to put your name on a waiting list for new builds.
The buyers market is always been complete fraud and game forever
The rent market is a real market and is completely controlled by market forces except for Marxist takeover and impose rent control
I wonder how many Americans are buying Canadian homes now that Biden’s gone commie bonkers...
Part of the problem is that the pandemic shut or slowed down the production of basically everything from nails and 2x4s to shingles and piping and flooring and everything else required for home construction. Therefore, the law of supply and demand is certainly kicking in here.
Maybe not paying a years worth of rent makes a nice down payment on a starter home.
That’s probably coming...hopefully after our house sells in next month
Huh...Canada is more commie bonkers than US
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