Quote:
Originally Posted by fotze
The part that I don't fully understand that seems to be omitted from the bubble analyses that seems to me to be just as important as sales and inventory numbers is the employment numbers. What we have in Alberta that Miami and Vegas did not, is healthy employment.
If a person could afford their overpriced home at the start why could they not continue to afford it if they still have their job. Plus people get raises and bonuses etc as time goes on. We all know that when you first start on your mortgage and what you can afford 5 years later are two different things. Your mortgage payment becomes a piece of cake. Sure there are exceptions.
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I tend to agree with you on the employment side, the wild-card is what the government does with interest rates.
Even if you're a double income no kid engineer couple if you bought a house based on locking in for 5 years at 3.5% you might have a suprise 4-5 years from now if the interest rate is 8% when your term is done, even if you still have your job.
With that said, not everybody in this city is a dink geophysicist couple. There are a lot of people who will remain employed but won't be making anything near what they were making when they signed up for their mortgage, compound that with higher interest rates and you could see a further bubble deflation. But the reality is that if people are going to feel the hurt Alberta will likely be the last in the country. If things start to hurt too much in Ont, the BOC will back away from the rate increases.