Beware of the Housing Bubble

The subject of the existing housing bubble has been referred to frequently here in Finance. (especially by Ashedfc who is always on top of things :) but I thought i would just bring it up again because there are many SCer's in housing bubble areas.
Vancouver and Toronto are the biggies of course, but also their outlying areas. After that, you can look at any prospering city where housing is expensive . . .except Halifax, which is experiencing huge growth due to the gov't contract just awarded.
Condos are the most volatile real estate and have the greatest chance of a correction. Toronto currently leads the world in the amount of condos being currently built.

Everyone's circumstances are different, but my personal advise is to hold off on buying a condo (same can be true of houses depending on location), rent for now and keep socking money away. Chances are good, when the bubble bursts, you can swoop in and buy a condo/home for many thousands less, maybe even tens of thousands. When you compare how hard it was to "save" that money. . . it seems a no-brainer that this would be a relatively easy way to save a heck of a lot.

Of course, I am shooting myself in the foot by saying this because I earn my living on mortgages BUT just for you guys, I'll take the hit. Lol!!

See article attached. http://www.theglobeandmail.com/globe...2347630/page2/

Yes even if the interest rates go up by 1 % which they eventually wiil , I see massive defaults coming up as lot of people are living pay cheque to pay cheque and have variable mortgages. Their monthly payments will go up as a result and they won't be able to keep up.

Also I see massive lay offs coming in the public sector both federal and provincial . The budget both fedreal and provincial ( especially ON ) which will come out this month has lot of belt tightening and austerity measures in it.

I see no pay raises or lots of lay offs for federal , provincial and city workers. Lot of gov jobs and city jobs like nurses, teachers etc will be affected.

The city of Toronto especially the mayor Rob Ford is already playing hard ball with the unions and city workers.

I see Stephen Harper and Dalton McGuinty ( ON ) premier doing the same soon. The rhetoric is that we don't want Canada or ON to become another Greece hence we have to cut public spending and need austerity measures.

All these laid of workers will have a tough time paying their mortgages which will lead to a crash.

The story is going mainstream:

http://www2.macleans.ca/2012/02/28/y...to-get-burned/

Quote:

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Originally Posted by brunt

The story is going mainstream:

http://www2.macleans.ca/2012/02/28/y...to-get-burned/

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TRUE, Specially when McLean's comes with the report on Page 42; but gives a scary image on its cover page, where a House with burning doors/windows. People tend to visualize/relate to pictures more quicker than reading reports..

In my expectation, housing is in the process of plateau throughout 2012 & thereafter it will depend on how soon the speculative buyers panic.... If they panic & sell in large numbers than a slump can be expected. It will also correspond with the increase in interest rates by Bank of Canada.
(& also Keep in mind, higher Oil price will have already started damaging the economy by then)

The best suggestion is: As soon as possible "Build an Emergency fund - or access to an Emergency Fund before it gets too late"...

another very interesting subject. Thank you for bringing it up.

We just moved from Burnaby(where we were renting) to Kelowna where we bought our home November 1st, and it seems, very unfortunate, how foreclosures are so prevalent in our new town. It's quite sad. i also work in a bank and everyday i see people's accounts and they are living very close to paycheck to paycheck.
People, like my own husband are going to work up north, that is our salvation..for how long, i dont know, but many people are in the same boat, of course there are a small percentage that are not, and then there are the large population of retirees that are enjoying retirement in this town...so i don't know, an Emergency Fund sometimes seems so hard to reach...

Canada job market sputters, exports dip : its a recipe for the housing bubble to reach a tipping point..
http://ca.finance.yahoo.com/news/can...120130642.html