It’s always dangerous to predict turns in the market but MP Garth Turner is sounding the alarm. He says we’re “likely only a few months” away from the typical Canadian experiencing negative equity.
Negative equity is where you owe more on your house than it’s worth. Turner says Canada’s real estate market is being supported by 40-year amortizations because many people can’t afford homes without them. Our market is a house of cards that’s already starting to wobble he says.
In January, existing home sales plunged a huge six percent. For-sale listings were up 11%. And, prices are coming down in formerly hot big cities like Calgary and Edmonton. Could Turner be right?
It was a thought-provoking article, but there were a few things in the story we would differ with:
1. “Canadians banks are no longer discounting the posted rate.”
Not true. Perhaps they’re discounting less than in the past but they’re still discounting.
2. “Shaky lending practices that coloured the U.S subprime market are now creeping into Canada.”
Not true, generally speaking. Lenders’ underwriting standards have been tough lately…and are getting tougher.