David Dodge: RE market need cooling

Domus pointed out this article in the Globe and Mail.  Former Bank of Canada governor David Dodge is adding his voice to the opinion that the federal government should act now to cool the Canadian housing market.

“These prices look pretty high by any conventional measure,” he said in an interview, citing measures such as the ratio of house prices to incomes and rents to house prices. “So, the likelihood of house prices falling a bit over the next few years is probably somewhat greater than that they would rise over the next few years.”

“Whether there’s a bubble or not you can only see after the fact,” he added. But it wouldn’t take a bubble bursting to cause consumers pain. If your house price goes down 10 per cent and you’ve borrowed 95 per cent of its value, all of a sudden you’d be in hot water, Mr. Dodge noted.

His comments come as Ottawa weighs action to take a bit of steam out of the housing market. While the government does not believe there is a bubble, it has been evaluating tools it could use to help ensure that more consumers don’t take on mortgages they won’t be able to afford when interest rates rise or if house prices fall.

The worst scenario would be if both of those things occur at once. Consumers would find themselves with higher monthly mortgage payments and less valuable homes.

While it’s virtually assured that interest rates will rise at some point, Mr. Dodge is of the view that it’s also realistic to assume house prices will fall. He notes that mortgage rates are likely to rise, which will put a damper on the market. Secondly, “we’re probably into a fairly long period of relatively slow income growth,” he said, and that too will curtail some housing activity.

Read the rest of Dodges comment in the full article here.

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@gork: I strongly suspect this criticism is aimed at the athlete's village in Whistler, which are probably temporary. The article quotes the coach for the Nordic combined event. This event is held at Whistler, and the athletes and staff would be there as well. And with the lack of space at Whistler I can imagine that the accommodation would be more crowded than the "4 star" hotels they have become accustomed to on the World Cup circuits.

So, while I relish Olympic and RE schadenfreude like most bears, I would have to dscount this article for shoddy and sensationalist journalism.


@gork: lol, so ungrateful of their million dollar views and granite counter tops!


@patriotz: Well put. Since it may take a while if ever to dismantle CMHC, perhaps the way to go is to make RE capital gains at 75%, to reflect the risk that taxpayers are taking in backstopping the CMHC. The extra money can be set aside for a rainy day.



Capital gains are included in taxable income at 50%, i.e. you pay half as much taxes as on the same amount of employment income. Also if you have past capital losses (on anything) you can deduct them against gains.

What I find funny is that people can say they are opposed to discriminatory taxation of RE gains, yet they think that discriminatory financing of RE – i.e. CMHC – is just fine. Nobody in their right mind would say that government guarantees for borrowing to buy stocks is a good idea.

If the government gets the hell out of RE financing, I'll be perfectly happy if RE gains are taxed the same as for stocks.


@Vansanity: True, but aren't capital gains taxed at a different rate than say income? What I am suggesting is a tax rate above this. If you are pure at heart, you could say that buying RE is like any other investment and the capital gains should be taxed like any other investment. But in my opinion, housing as an investment deserves special treatment, especially if the gains are short term speculative. This is because RE affects the financial system and social stability, and because we as taxpayers are backstopping it through the CMHC.



If your property is not your principal residence (definition, you've lived in it for 1 year) than you have to pay capital gains when you sell. Tax free on principal residence only. If you own a property that you rent out and later sell, you will pay gains. And if you flip a home within a year even if you lived in it, you pay gains.


@patriotz: Nice, Flaherty just rocked the world of speculators and HELOC borrowers. I didn't expect it but wow, I'm pretty impressed.

There was a report out this AM that deliquencies 90 days or more are up 50% and average household debt has risen to $96k.

Flaherty's sheeple are punch drunk in a spending frenzy. They've literally forced his hand to make these changes. Quite the departure from what he's been saying and what the MSM has been reporting, int't it?

Were the bloggers right… again? Duh.


I find it ironic that they are so concerned with the health of the RE market while at the same time they are still insuring non-owner occupied properties bought for speculation at all. They need to impose a special capital gains rate for flips like in Germany (i.e. bought and sold within a short period of time and not owner occupied – with vigilant fintrac like audits to prevent using relatives names for home titles) if they really want to discourage speculation and but still encourage investment in long term rental stock. Another disaster in the waiting, brought to you by CMHC, backstopped by the taxpayers. I like the German (popular) solution: kick Greece out of the EU. Problem solved. Too bad we won't be given the chance to kick out our own Greece, because the bailout is already being… Read more »


You could make a great drinking game for every time you read an article on housing that states there is no bubble. Most articles are saying several times.

I just realized they are doing what parents do with little kids… the sandwich technique of giving feedback.

There is no housing bubble, but you must now qualify for a 5 year fixed rate mortgage, don't worry though it has nothing to do with a housing bubble.



Changes to Canada's mortgage insurance guarantee framework that come into effect on April 19 include the requirement that borrowers will need to qualify for a five-year fixed-rate mortgage even if they go with a lower variable rate.

IHMO that will take 50% of new owner-occupiers out of the market at current prices. BTW this is exactly the rule I recommended on this board for those taking out variable rate mortgages.


The government will also lower maximum amounts that can be withdrawn when borrowers refinancing mortgages. And it will require a minimum downpayment of 20 percent for insured mortgages tied to non-owner occupied properties bought for speculation.

And 90% of speculators and Bank of Mom and Dad financing.

Duck and cover.


Vancouver Games continue downhill slide from disaster to calamity. Snowboarding nonsense is the latest fiasco threatening to make these Games the worst in Olympic history It is hard to believe anything will surpass the organisational chaos and naked commercial greed of the 1996 Summer Games in Atlanta or the financial ­disaster of the 1976 Games, which ­bankrupted Montreal, yet with every passing day the sense of drift and nervousness about the Vancouver Games grows ever more noticeable. The Canadian mint may be working overtime making coins, Canadian politicians may be working overtime ­issuing congratulatory statements about ­medal-winning performances by home athletes and the official website of Vanoc, the Games' organising ­committee, ­continues to pump out celebratory tweets on its Twitter feed: YAAAAYY! GOOOOOOOOOOOOLLLLLLLLLLLLLLDDDDDDDDDDDDDDD. Such euphoria – or faux euphoria – may be the message that Vanoc wants the world to… Read more »



deferring you taxes is not a technical relief but it does provide some breathing room for some people while attempting to ensure that the province will be able to collect down the road and still get their revenue

Nobody has definitively told us yet whether these deferred taxes will be senior to existing mortgages or junior to them. If the former, the mortgage lenders will not allow it for any more than the very short term (they have the right to foreclose if any senior liens are placed on the title), and if the latter, the province is going to fail to get a lot of its money back as it will have no equity to go after.

A debacle in the making whichever way it is implemented.


It's funny that most RE shills are saying that the Olympics will boost RE numbers. According to Dummy Dave it has very little to do with Vancouver RE. Interesting could there be some intellect in that brain of defunct Dave. I think this is true also.
I have been out enjoying the events and the buzz. The Olympics much like current Vancouver RE is just not worth the price of admission.
I am a huge fan of the Canadian Team. I just think the games are a big waste of resources That could be better spent elsewhere.


@Dave: i do go out a lot, enjoy life, am happy yet still think you're an idiot, Dave.


@Dave: LOL! Are you serious man?


@Dave: integrity is not part of Dave's vocabulary.


@daeset: here's a different angle on the olympic housing:



Are you familiar with the difference between consuming and promoting?

Consuming is what you, supraboy, does: You consume the Olympic games, you consume the fast car, you consume the fast food and the Chinese restaurant's food in Aberdeen.

Promoting is what they do: They show you a 'role model' who 'eats fries' or 'drives fast car' so you 'consume'.

An uneducated and clueless fool like arit comprehends that… I am sure a smart guy like you can grasp it.





An athlete advertising McDonald's French Fries is, to put it in terms you feel familiar with, akin to Toyota advertising how superior their gas pedals are.




I'm voting down anything arit posts up because he's a retard. He thinks athletes aren't human and needs to eat superfood and never putting their hands on fastfood. What an uneducated and clueless fool.


@Dave: You hit the nail on the head. So much negativity here. This board is for a minority bunch of bitter boys who can't find a way to enjoy life. They should just grow up, pull their head out of their arse and just watch the games.


A headline I saw in my Crystal Ball Tonight:

The year is 2016. Location, Vancouver

(please disregard the incorrect date and location written in the article).

In buyer's market, cash gets the homes!


This is the headline from the day arit buys house.



@arit: wtf, what's wrong with eating fast food? What a retard.


How much do these guys get paid a year to state the obvious? Years late, I might add.

Starving Artist

Just saw a teaser spot for tonight's The National on CBC and the lead story was the tightening of first time homebuyer requirements. Looks like the bears are finally going mainstream.