Comments on: Mark-To-Fantasy Continues http://www.swimupstreamtowealth.com/2009/12/mark-to-fantasy-continues/ Thinking Differently Than Conventional Wisdom Thu, 02 Sep 2010 13:30:49 -0700 http://wordpress.org/?v=2.8.5 hourly 1 By: admin http://www.swimupstreamtowealth.com/2009/12/mark-to-fantasy-continues/comment-page-1/#comment-3 admin Sun, 17 Jan 2010 03:14:15 +0000 http://kk.dev.visionarys.net/2009/12/mark-to-fantasy-continues/#comment-3 David, Just like Canada, one third of Americans had no mortgage when the crisis started. The housing problem in the US is surrounded by the 30% who bought from 2003-2006. The crisis in homes in the US had nothing to do with the leverage in the banking sector. It had to do with price appreciation. Also, I commend Canada for allowing banks to take recourse in a short sale, but this doesn't mean that homes aren't overvalued. Do you think that people think rationally when they see prices rising? They get greedy and push prices higher. The fear of not being able to walk away from the mortgage won't outweigh the greed that sets in when housing rises this fast. Housing is tied to wage growth or inflation no matter where the home resides. If home prices rise much faster than those two factors, trouble sets in. I am sure many Canadians will point to factors that you identified to justify this level of price appreciation. I know many in the US had justifications for our appreciation as well. But, when housing moves faster than the previously mentioned factors eventually a correction happens. I doubt Canada will experience any collapse like our housing as we got to crazy valuations, but Canada is not impervious. On the bright side, Canada's commodity based economy should hold steadier so long as China keeps buying hard assets. But, I am just very surprised when Canadians argue it won't happen there. David,

Just like Canada, one third of Americans had no mortgage when the crisis started. The housing problem in the US is surrounded by the 30% who bought from 2003-2006. The crisis in homes in the US had nothing to do with the leverage in the banking sector. It had to do with price appreciation. Also, I commend Canada for allowing banks to take recourse in a short sale, but this doesn’t mean that homes aren’t overvalued. Do you think that people think rationally when they see prices rising? They get greedy and push prices higher. The fear of not being able to walk away from the mortgage won’t outweigh the greed that sets in when housing rises this fast.

Housing is tied to wage growth or inflation no matter where the home resides. If home prices rise much faster than those two factors, trouble sets in. I am sure many Canadians will point to factors that you identified to justify this level of price appreciation. I know many in the US had justifications for our appreciation as well. But, when housing moves faster than the previously mentioned factors eventually a correction happens.

I doubt Canada will experience any collapse like our housing as we got to crazy valuations, but Canada is not impervious. On the bright side, Canada’s commodity based economy should hold steadier so long as China keeps buying hard assets.

But, I am just very surprised when Canadians argue it won’t happen there.

]]> By: David Pylyp http://www.swimupstreamtowealth.com/2009/12/mark-to-fantasy-continues/comment-page-1/#comment-2 David Pylyp Sun, 17 Jan 2010 02:33:26 +0000 http://kk.dev.visionarys.net/2009/12/mark-to-fantasy-continues/#comment-2 I posted your comment" "People always talk about how the Canadian education system is better than the U.S.’s. But, it looks as if Canadians are no smarter than we are. They think nothing of their crazy housing market. I guess they want to learn the hard way, just like us." http://www.caamp.org/meloncms/media/CAAMP%20Fall%20Survey%202009%20Fact%20Sheet%20FINAL_2.pdf Our legal and Banking System has no provision for short sales; they chase you for the short fall (deficiency balance) post sale. Canadians are 1/3 mortgage free Average Canadian carries a mortgage of 140 odd thousand that comprises 52% of their homes value. Our banking system is not leveraged to the same extent that the United States has. You are right. I guess we do learn the hard way. David Pylyp http://Shoptoism.com I posted your comment”
“People always talk about how the Canadian education system is better than the U.S.’s. But, it looks as if Canadians are no smarter than we are. They think nothing of their crazy housing market. I guess they want to learn the hard way, just like us.”

http://www.caamp.org/meloncms/media/CAAMP%20Fall%20Survey%202009%20Fact%20Sheet%20FINAL_2.pdf

Our legal and Banking System has no provision for short sales; they chase you for the short fall (deficiency balance) post sale.

Canadians are 1/3 mortgage free
Average Canadian carries a mortgage of 140 odd thousand that comprises 52% of their homes value.
Our banking system is not leveraged to the same extent that the United States has. You are right. I guess we do learn the hard way.

David Pylyp
http://Shoptoism.com

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