Make a buck on Canadian housing bubble?

[nero3]

Re: Make a buck on Canadian housing bubble?

That is where I disagree with you Glenn, as Marc Carney is willing, able and stupid enough to prove you wrong.

Now if you would have said keep X% in PMs and/or Oil, then we would have been in agreement.

I think it's dangerous to bet on the things that prevented the Canadian bubble to pop to be a good place to have your cash if it's a big crash in Canadian prices allowing you to buy for 5 % of former value you are wating for.

[LargoWinch]

Re: Make a buck on Canadian housing bubble?

I think it's dangerous to bet on the things that prevented the Canadian bubble to pop to be a good place to have your cash if it's a big crash in Canadian prices allowing you to buy for 5 % of former value you are wating for.

That is a fair comment nero3, however I do not think commodities prevented the Canadian bubble to pop, but low interest rates coupled with over-aggressive policies from the CMHC and the Harper Gov't.

The point I am trying to make to Glenn is that 100% cash is not safe while waiting to pick-up the pieces of an eventual Canadian RE crash which could be a few years away.

[nero3]

Re: Make a buck on Canadian housing bubble?

That is a fair comment nero3, however I do not think commodities prevented the Canadian bubble to pop, but low interest rates coupled with over-aggressive policies from the CMHC and the Harper Gov't.

The point I am trying to make to Glenn is that 100% cash is not safe while waiting to pick-up the pieces of an eventual Canadian RE crash which could be a few years away.

It's clear that the Canadian market had a much shorter lag from when the market peaked to when interest rates was lowered due to the financial crisis hitting closer to the peak in the Canadian housing market. That might have prevented the bubble from imploding. It seems there is the debt of private companies and private households going in oposite directions after the financial crisis. However, I think the boom in China from 2005 (starting in june 2005 when US housing peaked ) (that's when the shanghai index started to climb and that commodities started to get real wings), is the main reason market's as the Canadian, Norwegian and Australian market have kept going higher. If something was to make those market's go bust I think it must be a severe slowdown in commodity prices. Unless that happen I suspect the market's won't crash at all.

[Spartacus]

Re: Make a buck on Canadian housing bubble?

That is a fair comment nero3, however I do not think commodities prevented the Canadian bubble to pop, but low interest rates coupled with over-aggressive policies from the CMHC and the Harper Gov't.

my thinking's the same: subsidies, rates and the people's responsiveness to incentives/stimulus
1. Canada has historically valued housing a little bit less than in the US(maybe because of point 2); having started a little lower, Canada could go a little further before hitting the ceiling
2. US incentives to purchase housing have almost always been higher
2a. the Canadian government still had incentives (residents were still responsive to incentives) to grant room to manouevre on incentives
3. Canada lagged a bit in lowering rates after the dot-com;
3a. the incentives from 2a. had a little more room to work (
3b. the Bank of Canada had more room to lower rates
3c. the citizenry was still responsive to the interest rate incentive

[aaron]

Re: Make a buck on Canadian housing bubble?

Canadian loans are full recourse, correct? Can you get out of it if you declare bankruptcy?

[Spartacus]

Re: Make a buck on Canadian housing bubble?

Canadian loans are full recourse, correct? Can you get out of it if you declare bankruptcy?

Like the US, mortgage recourse varies by province - some provinces allow "deed in liue of foreclosure"

bankruptcy does fully discharge a mortgage and I believe bankruptcy is a little bit easier in most of Canada - easier to declare and less onerous than in the US. I'm not 100% sure about the ease & onerousness.