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08-22-2012, 07:00 PM
Join Date: Dec 2006
Originally Posted by
Great post, you explain yourself very well
A correction is definitely in order, though comparing it to what happened in the States is a big exaggeration. It'll be a slow correction as economies recover and interest rates rise, housing prices will stagnate or drop slightly. We aren't likely to see interest rates rise quickly, so it won't be anywhere near as drastic as it was in the States imo. We also have much tighter mortgage rules etc.
I guess it depends on what you're defining "US style" crash as. Will there be people defaulting on mortgages en masse? No, I really doubt that'll happen. But nationwide US prices dropped about 30% from their peak and the construction industry tanked. I don't see those as unrealistic scenarios for Vancouver. Average prices for detached houses have already dropped about 10-15% from their February peak. Fairly drastic drops have happened in Vancouver and they'll happen again.
People like to make fun of the US sub prime loans and pump up the Canadian system, but I think in the near future we're going to look back at some of the moves the Conservative government made when they came into power (changing lending rules to allow government insured 0% down 40 year mortgages) and shake our heads in disbelief.
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