House prices and wages usually keep pace with inflation, since they essentially are inflation. But house prices went up 10%/year between 2000 and 2007.
Windsor's unemployment the highest in Canada.poop_on_you wrote: ↑Aug 26th, 2009 10:03 pmI don't know the population density 20 years ago, but I don't believe it's nearly as condensed as now. If you don't take population density and immigration into account, there are still affordable places right now. Windor is 2.3X, and it's only 4 hours away from Toronto. Toronto has changed a lot in the last 20 years and prices will need to reflect that.
http://www.windsorstar.com/life/Windsor ... story.html
Population density also grew in California, Florida, Nevada, Arizona, Detroit, etc... and they all had price crashes. In fact, the biggest (usually densest) cities in the US were hit the hardest.
http://www.financialpost.com/news-secto ... id=1523462
This article says 28%, and it's from a survey. I read another one that said low thirties, but it's close enough to make the point.
I didn't say 1/5 had a fixed rate, I meant 1/5th of people with 5 year rates come up for renewal in any given year. There are shorter and longer terms, but most people don't take them, and the short terms probably cancel the long, and can be ignored.
How? and So?poop_on_you wrote: ↑Aug 26th, 2009 10:03 pmIf you want to compare to the US, Canadian owners still maintained strong equity.
http://www.rbc.com/economics/market/pdf ... n_0209.pdf
Canadians haven't yet been forced to refinance, we're too early into the crash. Banks have a financial interest in higher house prices, so they'll try and pick irrelevant data that shows that we compare favorably to the US.
Check the housepriceratios tab. Long term value is 100. 2008 Price to rent ratio is 75.3% above average, and Price to income ratio is 23% above average. (and it was 30% in 2007, before the 10% price drop.)
Given the typical overswing, 30-50% is a reasonable guess for a price drop from peak.
Not yet the case. House prices must fall (to some degree) because either the job loss continues or the economy rebounds, which will result in higher interest rates.poop_on_you wrote: ↑Aug 26th, 2009 10:03 pmThere is no inflation right now, only deflation. Inflation was at -0.3% in June and -0.9% in July.
http://www.canadianeconomy.gc.ca/Englis ... lation.cfm
If you just held cash in the last 2 months, you are richer now.
When you have rising unemployment, there is usually no economic growth and it will be a contraction or deflation, like what we have right now. Stagflation only happens when the government restricts labour market. That's the opposite of what they want right now.
Interest rates will only be raised when BoC feels confident that the economy has recovered or that inflation has been out of control, which is not the case.
poop_on_you wrote: ↑Aug 26th, 2009 10:03 pmThat is precisely what they are trying to do. They are trying to prevent a crash. A lot of indicators have shown signs of recovery already(though that doesn't mean it will recover). Companies earnings are up. Retail sales are up. I would say the government is doing a fairly good job considering the magnitude of the recession.
I agree, I do think the government is doing a good job managing the recession, I don't think they're doing a good job managing the housing market/bubble.
I'm not saying that's what everyone has, I'm using that as the stereotypical new buyer, since most of them have 5% down and most (60%) are on 30/35 year terms.poop_on_you wrote: ↑Aug 26th, 2009 10:03 pmAgain, the home owner's equity is not 20:1. It's more like 1/(50%-70%) according to the data I posted. Maybe you are thinking of new buyers.
Even so, where are you getting this info that everybody buying a house right now has 0-5% down payment? It'll be hard getting a house with just a 5% deposit nowadays.
http://americacanada.blogspot.com/ figure 4. I wish I knew how he was getting this number, cause it seems insanely low.