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Mortgage Broker News | 23 Mar 2015, 11:35 AM Agree 0
In the wake of one bold housing crash prediction, brokers are questioning the methodology one analyst used to arrive at his dire conclusion.
  • Jerry Quigley | 23 Mar 2015, 01:49 PM Agree 0
    A very weak argument, Mr Vallancourt, if, in fact, it was meant to be an argument vs an opinion.
    While I do not agree with MacBeth's analysis and opinion, his has merit. It's fine to base affordability on debt service ratios when interest rates are near normal. However, when they are near zero, it is unrealistic to take on maximum payments using DSR because the interest rate will increase eventually making the payment now unaffordable, not only for the current owner but most people he will want ( and need ) to sell to. Then the price comes down to meet an affordable payment.
  • Ron Butler | 23 Mar 2015, 06:53 PM Agree 0
    We have sound underwriting systems in Canada; our lending has no relationship to pre 2008 underwriting and securitization systems in the USA. The largest single factors in that USA real estate collapse were those highly defective practises. That being said there can be confluences of factors that lead to price run-ups and different factors that burst the bubble. No rational person could sit back and say that the price run-ups in some Canadian cities are destined to continue. How it ends up is just speculation, whether a big crash or a slow fizzle is just hard to know. Fact is: a broken clock is right twice a day, for the Garths and MacBeths of this country who try to make a living of repetitive prediction this is just throwing rice at the wall, eventually they may be right. I expect a correction eventually but I quit hanging a date on it a long time ago.
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