“You can never really provide cheap housing,” argues Moin Yahya, associate professor of law at the University of Alberta. “All you can really do is provide cheap cash, which of course then drives up the price of housing. You’re only distorting the market.”....
“What’s immediately at risk in the event of a significant downturn is the capital of CMHC, which is about $12-billion, so once they blow through that, then they start turning to the public purse,” says Finn Poschmann, vice-president of research at the C.D. Howe Institute.
“To blow through that, you need unemployment that stays high for a little while and a significant increase in the number of mortgage defaults. That’s not farfetched – it has happened before....
Ottawa is already in too deep.
“The system as a whole is too big to fail,” [David Dodge] says.
“And when something is too big to fail, the government will come in.”
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
Interest rates will remain low, so don't worry - be happy.
We should all be expecting a 25% raise in 2013 to "normalise" the price-income ratio.
All good prognosticators will make a prediction of either price or time period but not both. In this case Mr MacDonald suggests that today's house prices will be justified by rising incomes though he fails to mention how long it will take for incomes to rise to the appropriate level, surely he doesn't see it happening in 2013 alone. Does Mr MacDonald see house prices moving sideways for an extended period of time or simply rising slower than incomes. Either way you do the math to figure how long it will take for incomes to rise so as to justify the current values of residential real-estate. Around the world reversion to the mean has taken the form of falling house prices not rising income. Perhaps in Canada "this time it's different."
From that article: "private mortgage insurers ... could resist measures to curb risky behaviour". It is difficult for me to imagine private issuers doing worse than the CMHC in this regard.
finiki, the Canadian financial wiki
“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.” [Richard P. Feynman, Nobel prize winner]