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Canada's bubble about to burst - 25-per-cent drop in property values


Alekbaylee
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http://www.vancouversun.com/business/Canada+bubble+about+burst+research+firm+argues/5028916/story.html

 

I think it's exagerated - a 10% drop is possible but not 25% IMO

Now Vancouver area market is another story that has no correlation with the rest of the country.

 

 

Wouldn't surprise me if 25% did happen on a weighted average basis.  IMO, such an event would probably look a little like:

 

Place                                        Drop    Population affected

 

Greater Vancouver                        -50%  2 million residents

Calgary/Edmonton/Regina              -35%  2 million

GTA                                            -30%    5.5 million

Ottawa                                        -25%  1 million

Montreal                                      -20%  4 million

Elsewhere                                    -15%  18 million

 

Weighted average                          >25%  32.5 million

 

 

 

Not saying that something like that will actually happen, but for me it would not be a shocker

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-that would be depressing

 

-any thoughts how that would effect other prices(stocks, bonds, commodities),economy, etc

 

-personally I have thought that something like that would happen for the last 25 years...I have given up on thinking that it could happen. (so I think you should think that it has a better chance of happening i.e. do the opposite of what I think)

 

 

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I agree that pricing in Vancouver is at bubble levels... I am not sure that a 25 or 50 basis point move in rates by the Bank of Canada will be enough to bring about a large decline.

 

I am thinking that the most likely scenario is a sideways market for a decade or more; inflation at 3% per year will start to bring things into line.

 

Should interest rates increase dramatically or should China experience a major hickup (causing commodity and stock markets to tank) then Vancouver could be in for a hard landing; these look to be pretty low probability events right now.

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I can't predict the future, but Canada's RE market seems to be in an unsustainable place, and we've made a bet against it by renting instead of buying our first house.

 

If the bubble bursts within the next few years, we'll hopefully be able to get a good deal on a house, and if it doesn't, we won't have sacrificed much because our 3bdr apartment is comfortable enough for us (we don't feel we're sacrificing anything by not buying now) and the lower bills leave me more free cash to invest.

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