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Originally Posted by Claeren
Also note that many Calgarians own more than one house (most people I know do - which is scary that it is the norm not the exception) and there are at least 10,000 units (maybe even 20,000-30,000 once all these condo towers are finished and the 'hidden inventory' hits the market) already in Calgary ready to be purchased if the seller could find anywhere near their price.
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Really? If so, I'm assuming these are rentals, and I don't think the rental market has changed so much that these people (who were presumably in good enough shape to afford a second home) will be selling anytime soon at our current reduced rates. Other sources of inventory, like condo towers and new home building have also slowed, so as long as inventory numbers stay moderate and population numbers are steady (per Photon's stats), I'm thinking prices won't be too bad (although a decrease is almost certain).
Quote:
Originally Posted by Claeren
2) Among existing home buyers the total amount of equity withdrawn from homes is staggering and means that long time owners do not have the large percentages of equity (after the already ~20% drop) to offset the marginal (or outright negative) equity of first time buyers.
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Again, really? I know taking out home equity loans were a big thing in the US, but having a big mortgage down there was more tolerable because mortgage interest is deductible (or at least that's how I understand it). Were there equal numbers of people in Alberta throwing away their home equity on cars, tv's, etc.?
Quote:
Originally Posted by Claeren
3) This will turn out EXACTLY like the subprime stuff and/or the 1980's, if not worse. Either major deflation is going to set in long term which will eat away at home prices for 10+ years OR inflaton will explode and interest rates will spike to well above 15%.
4) As for looking for forecloures and defaults in Canada as a sign of bad times, you are putting the cart before the horse -- they start to happen after the next few dominos fall and people start to really get stressed financially. Canada is 2'ish years behind the USA just like they always are....
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Like the 80's in Alberta, the subprime meltdown was triggered when people could no longer make their mortgage payments because their interest rates spiked. That led to foreclosures, etc. Like Photon said, that is a different scenario, and I don't see the same events happening here in Calgary. Even if people lose their jobs, I would think mortgage rates/payments are still reasonable enough for people to ride things out instead of having to walk away from their homes.