Author Topic: Garth Turner - Real Estate in Canada  (Read 486684 times)

50centdollars

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Re: Garth Turner - Real Estate in Canada
« Reply #300 on: February 12, 2015, 08:48:01 AM »
[quote author=mcliu link=topic=6314.msg210631#msg210631 date=142375765

However, what about the off chance that we have another decade or two of low/declining/negative interest rates?  ::)
[/quote]

What are the chances a recession comes in the next decade? I think the odds are higher than rates rising.
50centdollars


petec

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Re: Garth Turner - Real Estate in Canada
« Reply #301 on: February 12, 2015, 08:56:19 AM »
[quote author=mcliu link=topic=6314.msg210631#msg210631 date=142375765

However, what about the off chance that we have another decade or two of low/declining/negative interest rates?  ::)

What are the chances a recession comes in the next decade? I think the odds are higher than rates rising.
[/quote]

+1

KCLarkin

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Re: Garth Turner - Real Estate in Canada
« Reply #302 on: February 12, 2015, 09:13:07 AM »
It won't be rates that pricks this bubble. A simple recession will do it. Canadians have way too much debt and can't afford their homes a zero rates.

There is absolutely no evidence to backup any of your assumptions.

frommi

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Re: Garth Turner - Real Estate in Canada
« Reply #303 on: February 12, 2015, 09:34:39 AM »
It won't be rates that pricks this bubble. A simple recession will do it. Canadians have way too much debt and can't afford their homes a zero rates.

There is absolutely no evidence to backup any of your assumptions.

When i recall it correctly than the real estate bubbles in Netherlands and Spain popped because of a recession, not because of rising interest rates. I can imagine that under rising interest rates inflation is rising, so house prices/wages possibly rise too.
« Last Edit: February 12, 2015, 09:41:06 AM by frommi »


wisdom

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Re: Garth Turner - Real Estate in Canada
« Reply #305 on: February 12, 2015, 09:55:09 AM »
I look at real life examples for what can happen - in Europe, US and Japan - housing prices in several countries are lower even though interest rates today are much lower than at the peak of the housing cycle.

To me this is enough evidence to show that prices can be lower as interest rates drop if debt levels are too high.

Human behaviour in the market breaks all the rules taught in economics - lower interest rates do not lead to higher asset prices in these instances.

wisdom

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Re: Garth Turner - Real Estate in Canada
« Reply #306 on: February 12, 2015, 09:57:40 AM »
This is why I believe 50cent$s maybe be right.

Liberty

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Re: Garth Turner - Real Estate in Canada
« Reply #307 on: February 12, 2015, 10:07:00 AM »
Housing is a very emotional purchase. When you buy stocks or bonds, you calculate your returns and (hopefully) are somewhat rational about it.

Most houses aren't bought like that. People usually live in them, so there's no rent income, and they tend to be bought because "it's what you do when you reach a certain stage in your life", because "everybody I know is doing it", and because of social pressure from your mother in law or whatever.

That's why I think what matters most is sentiment, and who knows what can make it turn, but I know that confidence is built over time, but lack of confidence can be very very sudden. Looking at interest rates is looking at it more rationally than most people look at it; in fact, many people now buy houses like they buy cars (stupidly), just by looking at the monthly payment rather than at the actual price + interests.
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LongHaul

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Re: Garth Turner - Real Estate in Canada
« Reply #308 on: February 12, 2015, 10:14:41 AM »
Has there been any incredibly dumb lending in Canada like the US had with subprime, etc?  If so who has been the most aggressive?

KCLarkin

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Re: Garth Turner - Real Estate in Canada
« Reply #309 on: February 12, 2015, 10:19:08 AM »
When i recall it correctly than the real estate bubbles in Netherlands and Spain popped because of a recession, not because of rising interest rates. I can imagine that under rising interest rates inflation is rising, so house prices/wages possibly rise too.

Before the housing crashes in Netherlands, Spain, US, Japan interest rates were rising.

Also, did the housing market crash because of the recession? Or was the recession caused by the housing crash?