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Full Version: Banks Prepare For MASSIVE Housing Bubble Burst In Canada!
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Housing market will burst like all bubbles do: Pape
Gordon Pape writes that between 1989 and 1996, Toronto house prices fell by 40 per cent, adjusted for inflation.

The other day, a reporter called to ask me about Toronto real estate prices. She was specifically interested in whether older people with a large capital gain on their property should sell their homes and move into rental accommodation.

Now, I don’t claim to be an expert on real estate, but I know a bubble when I see one and the Toronto housing market is in one now.

That’s not just my opinion. Doug Porter, chief economist for the Bank of Montreal, used the “bubble” word recently in describing the housing market in the Greater Toronto Area. He said that prices anywhere within commuting area of the city “are overheating and perhaps dangerously so”.

If you believe that’s scaremongering, let remind you that it has happened before. Between 1989 and 1996, Toronto house prices fell by 40 per cent, adjusted for inflation. It can happen again and probably will. It’s just a matter of time.

Our housing market isn’t the only financial bubble these days. The stock market is just waiting for someone to stick a pin in it. As of the end of last week, the price/earnings ratio of the S&P 500 was 26.47. That’s the highest since 2010. The historic mean, using data going back to the late 1800s, is 15.64.

This doesn’t mean stocks or house prices will crumble next week. But if history is any guide, the downturn will come sooner or later. No market goes to the moon.

So, what should you do to prepare? Stock market investors must be very cautious about making new commitments at this time. The Trump effect that has bolstered share prices since his election may not be over yet, but investors are increasingly concerned about the negative economic potential of some of his stated positions, including on immigration and trade.

Toronto's Housing Bubble Has 24 Months To Live: BMO

Desperate homebuyers, take a two-year breather. Housing speculators, take warning.

Toronto’s house-price juggernaut is two years away from the sort of peak it reached it 1989, when a housing bubble burst in the city, BMO Economics says.

“At the rate we’re now going with 20-per-cent year-on-year price increases, assuming stable mortgage rates and continued income growth, we’ll be at 1989 valuation levels in about 24 months,” senior economist Robert Kavcic wrote in a note last week.

Kavcic's note comes shortly after BMO’s chief economist, Douglas Porter, declared it’s time to “stop the pretense” and admit Toronto is suffering from a housing bubble.

Toronto's average house price jumped 27.7 per cent in February from a year earlier, to $859,186. Single-family homes soared to $1.57 million on average, a jump of nearly 30 per cent in a year.

Kavcic provided a chart showing how affordability broke off from its long-run average in early 2016, and is headed into bubble territory.

Collateralized debt obligations (CDO) basically means that banks are selling packages of almost entirely bad mortgages. Included in the packages are a few good mortgages that allow them to rate the packages by the top two or three loans, then sell them to unsuspecting people who end up in debt.

Market manipulation is starting to hit its peak in Canada.  As housing bubbles in Toronto and Vancouver grow to all time highs and cause massive instability, it’s important to get out of the system. People are much better off decentralized and insured with sound money instead of thinking their house is an asset or piggy bank.
Wonder if it will impact regions in the US?
I think it will, these things tend to have a ripple effect.
Well, I have no real estate in the US, sold my house there and carry the paper, but I hope those that do come out okay.
That would suck for people wanting to retire on the proceeds of their property. But prices are too crazy here in the G.T.A. it even affects the rental rates. I would welcome a pop. And stop letting forengers who don't live here buy here.