Here’s an article about real estate bubbles from the Ottawa Business Journal. Among other points:
There is nothing rational about the Canadian housing market. If it wasn’t for the Canadian sheep buying into extended amortizations (which only helps the “BANK”) we wouldn’t be in the affordable housing crisis we enjoy today! Wake up sheep.
Erik, I have to agree with your point about 30+ year amortizations fueling unaffordability. Trouble is, these products are so darn popular. People just can’t live modestly anymore—and it’s tough to impugn people for aspiring to a nicer house.
I agree with the other comments. Unfortunately, with the invention of longer term mortgages, it allows people to purchase homes that were outside of their reach previously which in turn leads to more competition in the housing markets which in turn leads to increases in home prices. The problem will only surface down the road when we more than likely approach a similar situation to the US where people over extend themselves with homes and the rest of the economy suffers as a consequence.
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