Oh boy. If I hear this one more time I will snap. They have “made” nothing. They are living in it. Unless they SELL it, and realize the gain, the “paper” wealth means absolutely ZIIIIIPPPPPP!! Mortgage rates are set in bond markets and with competition for capital from many providers, mortgage rates WILL rise sooner than people think. That is the ONLY thing keeping real estate in this huge buble we are in and the govt will not let burst. Mike is right, such a huge amount of gov’t intervention is only harming the future for real estate even more.

Calgary real estate is still overpriced. I run the numbers in mortgage calculators all the time. I make well over 6 figure income, I have substantial savings and zero debt and I cannot afford to buy a house at these levels. I don’t know how debt slaves do it. I really don’t. One serious illness, job loss, or other life altering event and it’s over for a debtor.

The govt cannot keep it propped up forever. The question is when will it tank, not if.

Carney said the central bank still has tools to boost the economy if annual consumer prices, which the central bank predicts will fall 0.7 percent this quarter, look as if they won’t return to target. The central bank has an inflation target over the medium term, and Carney said it is “absolutely essential” the bank meet its inflation goals.

“If we have to provide additional stimulus and we think that this situation is persistent, we are going to do our job,” Carney said in an interview with anchor Peter Mansbridge of the CBC. With the policy rate as low as it can go, Carney said the bank opted to give a conditional commitment about the interest rate path, and could still resort to “more unconventional policies, quantitative easing,” if needed.

Isn’t it funny that anyone who doesn’t want prices to crash to 1 dollar a home is a “realtor”? You are the type of person who, unfortunately, destroys the image of the TRUE real-estate bears. I was a real-estate bear for the last 3 years… where were you?

Mike,

I think that the USD will collapse…and the USA will monetize some of their debt. That means massive QE, printing money, etc. Rates will rise for the BONDS, which will raise FIXED MORTGAGES. But… guess what, the variable rates will be very low, because Ben Bernanke will keep them there. Canada will follow…the Bank of Canada rate will remain LOW for the next year or maybe even 2 years.

“Other things being equal, a persistently strong Canadian dollar would reduce real growth and delay the return of inflation to target.”

Carney reiterated that the central bank will keep its benchmark lending rate at a record 0.25 percent until June 2010 unless the inflation outlook changes materially. He also repeated the central bank retains “considerable flexibility” to conduct monetary policy, even with the policy rate as low as it can be.

Basically our Loonie is flying too high, and if they raise rates in Ottawa our Loon will be on the moon. So again, if you are looking for rates to go up to 10% and have homes go into foreclosure… that’s NOT likely to happen.

To combat inflation they would have to raise rates fast….but it will be too late after the world has binged on the money printed. The rates will go up HARD, but actual goods and services will go up HARDER….people will demand more pay, and get it. With the devalued money they will pay off debts faster with cheaper “dollars”. Look at the Asian currency crisis. Rates rose in some countries to 32% or 65% in the case of the Philippines!!! Did this prevent the massive devaluation (and hence inflation) of the currency? NO.

“Gary, you sound a lot like “Mike” on Bob’s blog.:

FYI on those on this blog, I’m not the “mike” he is referring to.

Worldclass — So what you are thinking is the USD will go down in value it will bring a commodity based CDN down as well, thus increasing house prices?

Natually, you are assuming interest rates will raise hard and fast to combat inflation. Thus causing anyone holding debt to be affected twice as bad (raising interest rates and growing unemployment)

Jimmy – “If I had a nickel for every post I’ve seen recently claiming unemployment to be a leading indicator or that recent home inventories and sale prices are somehow “imaginary” or being manipulated by a conspiracy”

Shadow inventory has already been proven, google it.

Yes, unemployment IS a leading indicator when it’s raising. Raising unemployment shows what is to come as people start to enter the “non-work force”. It is an accepted fact that unemployed people do not spend, buy cars, houses, get loans or live like they used to when they had jobs.

Mike

I apologize realtor.

Fail.

-
Mike Fotiou says: WorldClass respectfully gave his opinion, please return the courtesy.

Sweden has -0.25% rate for goodness sake… they are charging people for saving. This is the crazy world we live in. Debt levels can remain constant you say? Not when you get to pay them back in increasingly worthless currency. Then it becomes easier and easier to pay back debt.

I read the report and could not help but agree with you on all the points you made.

I get the impression that people are still greedy and not so fearful. When I met with some friends who recently bought a house they said “we got a good deal on this place, probably made $20 or $30k on it already.”

I am going to continue to sit on the sidelines with our massive downpayment until the market returns to normalcy and the economy shows signs of stability, not just tea leaves of recovery.

Can you also update your $1M plus stats?

-
Mike Fotiou says: Updated.