If someone can explain to me how a city in the middle of the prairies can have housing values escalate the way they did in the second half of 2005 to the first half of 2007 and say that it is reasonable, I'd love to hear a logical explanation. I live inn a house that went from being valued from 500k to over 1 million. The housing market is just waiting for a major correction. We have many of the same problems that the U.S. is having. People buying housing with 0-5% down. Speculators and an abundance of residential homes on the market. Now, we have 40 yr mortgages which gives many people the opportunity to dump their houses if interest rates creep up after their initial fixed rate is completed. If someone bought a house at 5.5 rate and then will have to get a new rate that may be 8-9 points in two or three years. Imagine the increase on a monthly payment for these individuals/families on a 600 k home. Our debt to asset ratio may not be as severe as Americans, but it is still high. And most of our "assets" are considred our real estate property. North America, in general, is mired in credit debt. The " I want it, I'll get it and pay later crowd" segment of the population keeps accumulating debt and companies are willing to keep handing it out. We need to get back to solid fundamentals in consumer theory. Such as, not buying a house that is worth more than 3 times your annual income. Having to put 20-25% down before purchasing a home. All this stuff freaks me out, and not in a good way. Sometimes I think we are closer to a depression than a recession. I just wanna go out and spend all my money before it becomes worthless. Hate to think all these years of work and saving mean nothing if the monetary system collapses.
If I had a suggestion for Bernanke in the states, I'd say let the market correct itself. Lowering interest rates is just a stop-gap measure. This is how the mess started in the first place. If houses have be foreclosed and jobs have to be lost, oh well, better than a complete collapse of the economy. Institute banking and credit regulations, so not every Dick and Jane can't acquire more debt that they can't pay. Tired of ranting.
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