Canadian Economic Challenges: Housing Prices

30 05 2011

To view the news article, click here.

Discussion:

  1. Do you believe the Canadian housing bubble will burst in the near future? If so, why? If not, why?
  2. Do you believe that shortening the insurable amortization period (the number of years you pay for your mortgage) is good for sustaining the housing market?
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3 responses

2 06 2011
Carolyne Wang

1. I believe that the housing bubble in Canada will burst in the near future because a large number of people are purchasing condominiums for capital appreciation. Thus, as the foreign investors drive up the housing prices in Canada, the profit people gain from renting condominiums to attain capital appreciation will decrease since these people now have to pay more for their mortgage every month. These people would then stop purchasing condominiums and cause a decrease in demand of housing, thus bursting the housing bubble.
2. Shortening the amortization period is not good for sustaining the market because it will increase monthly mortgage payments, which will decrease the number of property buyers who can afford mortgage at that rate. A shorter amortization period would cause the housing bubble to burst sooner.

2 06 2011
Heshani Makalande

1. Currently Canadian households have been running a large financial deficit because they keep purchasing new houses and a large number of buyers cannot even afford to pay their mortgage payment on time. Since most people fail to pay off their mortgages, they will find other alternatives, such as renting a basement etc and will no longer buy houses. This will decrease the demand for housing and therefore i believe the Canadian housing bubble will burst in the near future.

26 06 2011
John

I do believe that the canadian housing bubble will bust in the next 2-4 years.
Candians are carrying more personal debt than the Americans had before there collapse in 2006. Interest rates would have to go up before this would happen. Jobs that are created are paying a fraction to what they used to pay.
Who’s going to pay these crazy prices for homes?

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