Are young homeowners doomed if house prices drop?

That’s quite a headline on this CBC article.

…the Canadian Centre for Policy Alternatives suggests that one in 10 homeowners under 40 will be underwater on their mortgages — meaning their debts will be greater than their assets  — if real estate prices crash as expected at some point in the near future.

Right now, real estate prices are overvalued by anywhere from 10 to 30 per cent, according to Bank of Canada estimates. Eventually, most analysts say, the market will correct itself and prices will go down, either due to declining incomes, rising interest rates, or a combination of both.

When that happens, homeowners under 40 will be disproportionately affected — not because they stand to lose more actual dollars, but because they are debt-strapped and will see a bigger drop in their net worth, the study argues.

Realtors and economists say not to worry. Read the full article here.

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[…] –2 more years of price gains? –Will we get some good mexican restaurants? –Million dollar Canmore –‘Millennial blindness’ –Wealthy oasis with slowing economy –Teck to shed 1000 jobs here –Lofty prices in historical context –20% drop would be ‘devastating’ – […]


Uhmm…..I thought only an evil communist dictatorship country would do this…not a democratic and morally advanced country, in 21st century no less!

Native Women in Saskatchewan sterilized against will:


Real should read ESL. Damn autocorrect.


MLS watch:

Apply and register as an international student. During first week of classes, show your PR or citizenship. You will then be charged domestic tuition.

As a bonus, you will be in classes with higher International real students so higher grades.

Might be easier to get into professional schools using this route.

Win win.

[…] Bull! Bull! Bull! pointed out this article in the Vancouver Sun. […]

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Speaking of missing context, I wonder if Vancouver incomes were well below the national average in 1995 as they are today.


“Why a 20% housing correction would be ‘devastating’ for young Canadian homeowners”, CBC News video from Nov 10

“Host Dianne Buckner of The Exchange interviews the author of a new CCPA report which envisions a scenario in which home values drop by 20%. It finds many homeowners in there 20s and 30s would be pushed ‘under water.'”


@95: “The October ratio (to the national average) is Vancouver’s second-highest on record, eclipsed only by a peak of 2.91 reached in February of 1995.”

There is some context missing here. 1995 marked the bottom of the Toronto bust. Toronto is of course Canada’s largest RE market and has the largest impact on the national average. Calgary and Edmonton prices were also low in the 1990’s.

Today Toronto is at all time high, and Alberta is still not much below its all time high. Thus today’s ratio for Vancouver represents far more overvaluation than the 1995 ratio.


“Toronto and Vancouver’s lofty home prices, put into historical context”, Globe & Mail

“The October ratio is Vancouver’s second-highest on record, eclipsed only by a peak of 2.91 reached in February of 1995.”

“Finally, dating back to 1980, the average monthly sale prices in Vancouver and Toronto have always exceeded the national average.”

MLS watch

@82 If you never heard of methane before, you are really new to the game… Google rice fields and permafrost melt.

New in Vancouver: international students who are here only for the visa, and hardly go to class. Meanwhile domestic students cannot register for the courses they need, because they have second priority registration. Thank you Christy.


OUCH! Teck to shed 1K jobs in the ‘Couv…. It’s ok though, our economy is well-diversified… people to build real estate, people to sell real estate, people to buy real estate. What could possibly go wrong?


“Fed Tipping Toward December Rate Hike, Minutes Show”, Wall Street Journal

“The Federal Reserve sent out new signals that officials will raise interest rates in December as long as job growth and inflation trends don’t take a turn for the worse.”

Shut It Down Already

“What happened in Paris is nothing compared to the economic and financial terrorism committed against Canadians by these corrupt scumbags laundering their stolen money in real estate here.”

Congratulations, you just hit rock bottom. No idea why admin continues to tolerate this filth.


#83 Space It’s got nothing to do with “risk”. Here’s how this works: retail banks are in business to lend money. This generates a gross profit for them. Out of those profits taxes are paid. What is left over after taxes and operating expenses is net income. From this net income some money is paid to the owners (the shareholders) as dividends. The remaining money is held as retained earnings to further grow the business. They couldn’t pay themselves with their own dividend because they would have no earned income (no profit) to do so. Keep in mind dividends are only taxed on 50% of the dividend because of the dividend tax credit, which makes these dividends very tax efficient. This is because the money used to pay these dividends has already been taxed at the corporate level so the… Read more »


Have you noticed that the hardened bears are intolerant and unhappy people?


@71: “Seven foreign property buyers are being forced to sell their new Australian homes.”

Here’s what happened the last time a foreign buyer was “forced to sell” a luxury home:

Last month, as Sydney’s elite real estate agents were scratching their heads at the absence of any marketing campaign, Xu Jiayin’s palazzo-style harbourfront residence was quietly sold to an Australian citizen, Lola Wang Li, who told the treasurer in a statutory declaration that she was “not associated” with the previous owner “in any way”.

Tough guys those Ozzies.


@83: ” I would have thought you would be smart enough to figure this out. ”

What you seem to have trouble figuring out is that a more risky asset is supposed to have a higher yield than a less risky asset.


@HAMster – Uhm…it’s you that don’t have a grasp of proper risk or finance, if you don’t get what I’m saying. Or put it more simply, if the bank has $100K to lend out – either at 3% to some borrower who will then turn around invest the $$ into a sure no loss investments yielding 5%, or directly buy that sure no loss investment yielding at 5%. You have to be pretty dumb to lend $$ out at 3% when you can get 5%. Unless there is some very obvious reason they don’t. Considering the bears keeps attacking bulls or buyers for renting out condos at 2% – 3% cap rate, or buying when renting is supposedly cheaper, I would have thought you would be smart enough to figure this out. But I guess not, and hence why there… Read more »


@Oracle – Actually I read that methene is 10x to 20x worse than CO2. Yet no one talks about that gas, which is the main ingredients in cow farts, and the beef industry is apparently responsible for 90% of global methene output! Maybe we should tackle that low hanging fruit first….especially since it can also be used as an energy source.


@realist – I think we both agree that if there are tax evasion by these immigrants then CRA should really be going after them with full force and extract maximum pound of flesh. I personally think a lot of social benefit programs should be means tested as well – though I would exclude things like EI/CPP which are paid for by the premiums and should act more like insurance & DB benefits programs, and thus shouldn’t be mean tested. I personally don’t like it when I have to say pay the full price of daycare while someone far wealthier than me only have to pay 1/2 price cuz she has no income and wants to shop all day, instead of looking after the kid. Now, for the particular case of say foreign students that come here and study, and basically… Read more »

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“Stop resettling 25,000 Syrian refugees in Canada.”

I would rather take the 25,000 Syrian refugees and deport the last 25,000 locusts that have slimed their way into the country.

What happened in Paris is nothing compared to the economic and financial terrorism committed against Canadians by these corrupt scumbags laundering their stolen money in real estate here.


#74 Space
You postulated: Why don’t banks buy their own stock for the 5% div instead of issuing loans at 3%? That was embarrassing to read.
If I did understand you correctly, then you don’t seem to have a very good grasp of economics or equity investing.


Another example: consider these 2 scenarios.

1). Person believes that battery evhnology is going to make electric cars totally feasible and that companies like Tesla are going to own the roads. This person thinks Oil prices going to zero.

2) Person believes massive corruption exists and realizes that the trillion dollar oil industry will bury the electric car industry when the threat becomes real. Bury them with policies and buyouts. This person thinks Oil will rebound after the threat is contained and subsequent artificial supply reduction.

Now which scenario is more likely?



You are right in the sense that if you want change, you have to be active politically. What has happened in Canada is too many shunned this responsibility and the barabarians have infiltrated the regulatory agencies in Canada like CMHC, Health Canada, OSFI, CRTC, Competitin Bureau, ICBC, etc.

It has become a fascist state…but you will be deluded into believing otherwise.

Look at a simple notion like ridesharing company UBER. They can’t even break the local political corruption with the taxi cartel.

There is a reason hidden foreign bank accounts exist.


Welcome to globalization. Where the honest guy loses every time. Lol

Consider the carbon tax that they want to put on to fight climate change. Guess what? In Canada they will have the end consumer YOU pay for it. Not the Oilsands companies who are causing it.