JonboyE

In Canada someone earning $80,000 could borrow about $300,000 using today's posted rates. Your 3:1 gives $240,000. A little more prudent for sure but it is not a huge difference.

London Mike

I think there will be correction nationally but also pockets where there's only a cooling - some places may continue to rise slowly due to housing shortages. 25% correction is way too much though - lot of people would be at risk if that happened. People are vulnerable because of 150+% personal debt levels as opposed to the same sub-prime culture in the US. There won't be mass foreclosing for that reason, though interest rates are set to start rising from next year so that could affect a few people at the margins.

No crash IMO, just a cyclical reality check as JonBoy says.

Alan2005

I doubt this. Nobody can afford it.

jericho

That's pretty short sighted, dontcha think?
Just because you can afford it now doesnt mean you can afford it when interest rates increase.. and they will sooner or later.

jericho

Who cares. Canada might be able to control interest rates for the money it has now, but not tomorrow when China (or whoever) starts asking for a higher %.

Alan2005

You have more faith in the bond market than I do. Where's it been over the last few years?

Even if bondzilla wakes up it won't hit Canada first - where are the chinese going to put their money otherwise? EUR? USD?

Also, I believe the bank of Canada has printing press.

shelley748

Depends as well,on any long term liabilities eg car loans or other loans....TDSR and GDSR rates have moved downward with CMHC mortgages, as well as the amortization has shortened for CMHC mtgs.

I think that the house prices will correct themselves, in perhaps the larger cities like Vancouver or Toronto.

Almost Canadian

On another thread you were stating how vibrant it is. Which is it?

London Mike

The Bank of Canada can't afford not to...

Zen10

Same thing in Australia - houses where I am are around 40% overvalued. Problem as I see it in Australia is that there is plenty of room for them to cut rates down to a near ZIRP to keep house prices artificially propped up for years. Don't know if Canada can do this.

Boy d

3:1 may be a reality for some areas of Canada, but i doubt that will ever happen in Vancouver. 20 years ago before the present run up i bet it wasn't under 5:1 - likely higher.

ExKiwilass

Don't worry, Jericho. The house prices don't have much lower to go in NS.

Alan2005

You'll have to explain this to me. Because I see it as the exact opposite - the only way interest rates will go up is if what jerico describes happens and the bond market forces it upon them.

Boy d

it is, at least in comparison to cow town....but one can only pop by and not stay long term, unless a one bed shoe box will suffice......did that for 16 years....my suits were jockying for closet space with dry goods and corn flakes, then tripping over the bikes in the hall after a few wobbly pops....it did n't seem worth it anymore...after a brief stint on the north shore, we moved south and bought a house for about 2 thirds cheaper than vancouver.

Areas of Vancouver's core are largely owned by absentee owners....coal harbour's towers at night are mostly unlit for instance. Real souls are forced out so foreginers can hold on to propery that they infrequently or seldom stay in.

jericho

I'm not worried at all. I'm just about to move in to brand new 3 bed home, fully finished on 3 levels, on a 3.5 acre forested lot. Grand total is a shade under $400k.

I love BC, but there's no way I'd pay the prices YOU are paying to live there.