Naysayers

Seems like everyone is jumping on the 'housing correction' bandwagon.

The latest is TD Bank who, in a report released this week, say that "the Canadian housing market in 2012 will be a 'tug-of-war,' with low interest rates hauling hard on one end of the rope, and economic uncertainty joining forces with slow income and employment growth to pull back on the other. Ultimately, we expect the economic side of the equation to win out over the near-term."

TD sees a double blow coming. The economy suffering in 2012 and then higher interest rates in 2013, both of which will knock the stuffing out of the bloated housing market.

And how will it affect our little hamlet on the wet coast?

"Among the 12 major markets profiled in this report, Calgary and Edmonton ought to lead the pack. Solid economic fundamentals and the absence of a recent run-up in prices support our call. Toronto and Vancouver do not appear to be as lucky — we have them experiencing a greater-than-average correction in both sales and prices over the next two years."

Yesterday we noted that Garth Turner sees up to a 15% correction nationally with Surrey, a suburb of Vancouver, taking as much as a 30% hit.

Meanwhile the Globe and Mail is urging people "not to drink the housing market kool-aid."

In an article the doesn't pull any punches you are told straight out that "the affordability gauges used by the banks – i.e., people who make money selling mortgages – are too slack. They let people buy more house than they can comfortably afford while meeting their savings obligations. If your mortgage and all your monthly debt payments would exceed 30% of your monthly pretax income, then back off and keep saving. Worried that the price of houses will keep rising and you’ll never be able to afford to buy in? Won’t happen. When people like you are priced out of the market, the market must fall.”

When you combine all of this with Bank of Canada Governor Mark Carney's warnings this week, I don't think it can be spelled out any plainer than that for you.

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Email: village_whisperer@live.ca
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