Canadian property bubble, followed by general collapse due to
dependency on exports to the USA.
After that Australia.
Saw it on Russia Today so it must be right. Kieser report.
He's been pretty accurate so far. ?
House and condo prices have declined during the past 6 months to a year,
or have showed zero growth during that time frame.
The differences betweed US and Canadian residential real-estate markets
1) No ARM's, no no-money-down mortgages here in Canada.
2) Anything less than 25% down requires mortgage insurance.
3) Very little speculation done by the average home owner (ie - very
few second homes being purchased out of pure speculation)
4) We don't have the equivalent to Nevada, Florida, or other
locations where second homes used as vacation homes can be
5) We can't deduct mortgage payments from income tax, which limits
speculative home buying and bubble-forming price increases.
6) Our banks did not re-package mortgages into fancy derivative-
based products, and because of that our banks did not and do
not cut corners when qualifying potential mortgage borowers.
You can't look at the headlines about Vancouver or Toronto's high house
prices and extraplolate them to the rest of Canada.
We've had the loss of the Auto Pact, followed by 3 consecutive years of
the Canadian dollar being over-valued by 15% because it's been pegged at
95 - 99% of a US dollar. Still lots of oil, natural gas and electricity
being shipped to the US from Canada, but our economy is slowing becoming
less export-driven and more domestically driven.
Don't count on it. Look for more pain from a handful of Euro-zone
countries way before Canada or Australia.
Mexico will continue to deteriorate, their self-destruction fed by
US-made guns flooding south across their border.
Conditions in the US will also get worse - "security" budgets will
continue to spiral out of control as the US wages it's "War on Terror"
(tm) against it's own citizens. The "War on Terror" is a lot like
fighting cancer with chemo-therapy: It doesn't seem to matter how many
good people you harm (financially, psycologically, morally) in order to
detect, apprehend or (rarely) kill a handful of bad people. The end
result will be to create a culture of control. What you see now is just
It's really sad to sit here in Canada and watch you Americans consume
yourselves over this terrorism pretense as you allow your gov't to
destroy the very ideas of personal freedom and liberty your country was
founded on. We watch your local TV news, your national 6:30 pm network
news (which reported last night that your restaurants and grocery stores
are now on the lookout for food poisoning performed by home-grown
terrorists). If I believed in a god, I would be thanking him that I'm a
Canadian living in Canada.
There are more differences:
7) Canadian homebuyers cannot refinance an existing mortgage at a
new, lower rate, without paying a penalty to do so. That penalty
is formulated to make it financially unfeasible to break the
8) Canadian homebuyers cannot escape their legal obligation to
fulfill the terms of the contract (i.e.: pay it off) by simply
handing in the keys and walking away from the home.
9) Unlike the US, Canada does not use legislative and policy measures
to force banks to tease people into real-estate debt.
The US housing bubble was created by the shiploads of artificial credit
conjured up by the Fed. Canada also creates artificial credit, but not to
the same extent, and without accompanying legislative idiocies like the
Community Reinvestment Act.
That hasn't happened in Canada. House prices here have not declined.
At worst, they've remained static over the past 2 or 3 years in most
markets. In other markets, they have still increased.
Have a look at this document:
Look at the table of numbers on the last page (page 10).
You'll see how the year/over/year percentage change in house prices have
changed since 2000 for various western countries.
The UK has had some major Yo/Y figures (8 to 15%) during 2000 to 2004,
followed by a crash of -4 to -10% during the years 2008 to the present.
Far larger increase and decrease than even the US has seen, but the US
has been in negative territory since 2006.
Japan has been in negative territory for this entire decade.
Ireland is seeing MAJOR negative Yo/Y numbers in 2008, 2009 and 2010
(-10 and -20%).
Spain has been negative since 2008. Australia has been posting erratic
numbers this decade, almost all positive, but very high numbers lately
(10+ percent this year).
France has been posting negative numbers since 2008, and Germany for
this entire decade (what's going on there?).
Because Canada never goosed the market with the same stupid incentives the
US did. If there is a correction, it will likely be quite small. You must
also remember that Canada has very few large urban areas, so there are not
many places you can move where there are a significant number of jobs. It's
not like the US, where you can just move a few hours away and have much
lower taxes but the same employment opportunities.
Even the US meltdown was concentrated primarily in areas where it was
possible for underwater homebuyers to walk away without penalty, like
California and Arizona.
In most of the US, you walk away from it and incur no penalty other than
forfeiting what little equity you might have. That's a consequence of law.
In Canada, you are legally obligated to pay the dollar-amount owing,
whether you walk away or not.
Not in the US. In the US, government entities Fannie Mae, Freddie Mac and
FHA eat the difference, not the banks or the ostensible homeowner. That too
is a consequence of law. The law was specifically and particularly designed
to insulate banks from risk of borrower default, so that banks would be
more willing to lend to deadbeats.
Congress and the executive branch feverishly and maniacally continue to
push the public into real-estate debt, as though 2008 never happened.
One day, perhaps centuries hence, history will look upon the modern debt-
fetish the way we now regard Mayan human-sacrifices.
People are starting to find out that is not true. Back in the olden
days when a bank could recover all of what it was owed in the
foreclosure sale they let people walk away but now that the loan are
more than the house is worth they are coming after the owner for the
difference. The only out is bankruptcy.
On 12/22/2010 11:40 PM, email@example.com wrote:
I believe they're sending 1099 forms to the IRS for the amount not
recovered in the foreclosure. You have no money to pay the mortgage
and you give the house back to the bank, the bank sells the house at
a loss and you get a 1099 for the amount of the loss. The IRS comes
after you for the amount on the 1099 as income. Anyway, you get screwed
unless you take precautions with other paperwork maneuvers.
I haven't researched it fully but I think there is some legal
maneuvering to protect you from the IRS since you lost your
home rather than some investment property. "Boys, we won't get
any blood out of this turnip. Let's get after the next one."
That's a lie. Under any foreclosure (and handing the keys in to the bank is a
foreclosure) the borrower is *still* responsible for the entire loan, unless
discharged in a bankruptcy (which is difficult to do).
The US is no different.
Not true. The bank gets it money, but the borrower is still on the hook for
Yes it is. The US is completely different. America invented artificial
credit in December 1913, and America continues to invent more of it,
causing reciprocal infections in other parts of the world.
Nope. Buyers lose their equity, and their credit rating tanks, but
they're still off the hook for the remainder. That's how the banks ended
up with so many "foreclosed" properties on their books.
Sorry, but it's completely true. It's happening now. Look it up.
Specifically, look up what the FHA is now doing under orders from
Congress, and look up how Congress removed the caps on how much low-
quality debt Fan and Fred are allowed to buy.
The bank still has the right to pursue the former owner for costs and
any outstanding balance from the foreclosure sale. (I know someone
facing that as we speak)
Read the terms of your mortgage it may even be spelled out there that
you agree to pay. That is likely if this is a post 2000 loan.
In any case you can get sued for just about anything in the US.
Bankruptcy will generally get you off the hook if you can take it.
No it certainly is not (any different). You're just showing your
You're simply *wrong*. You really haven't a clue. Just because you turn in
your keys doesn't let you off the hook for the remainder of the contract,
unless the lender *allows* it. Often they will (short sale) so they don't
lose even more, but they're under no obligation to unilaterally release you
from your obligations.
You're wrong here, too. Credit is much tighter. Yes, silly things are still
being done, but it's not as you suggest.
To cover the banks, yes. They are also going after banks that made (and
packaged) bad loans under iffy or fraudulent circumstances. You simply don't
know what you're talking about.
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