Well it's probably 50 or 60 pages back by now, but I'm still trying to figure out why there's going to be a 50 - 60% crash in real estate. No one has been able to point it out to me...doesn't a real estate crash need at least a few of these three things, if not all 3.Mark77 wrote: ↑The actual sales process will largely be guided by the desires of the insurer of most of the loans, CMHC. The CMHC has, in the past, shown a willingness to sit on properties for a significant period of time, rather than blowing properties out quickly through auction.
Since the CMHC faces a massive volume of insurance claims in the future, and since an avalanche of defaults into the marketplace would create a crisis of confidence in the marketplace, I would expect the CMHC to do everything possible to impede the price discovery process.
Fortunately for bank shareholders, the foreclosed houses do not sit on bank balance sheets, and will not become ongoing liabilities of the Canadian banks in terms of maintenance, property taxes, etc.
However, it is unclear whether or not a federal government entity (the CMHC) is required to pay municipal property taxes if they end up holding substantial portfolios. Currently federal government-owned buildings are exempt from municipal taxes and municipal bylaws. Could be some very interesting legal questions that need to be answered in this regards if the CMHC ends up holding large portfolios of foreclosures.
1) Over valued Real Estate that is out of whack with the norm...Real Estate is probably 10 - 15% overvalued with respects to income, interest rates, employment levels in most cities (Vancouver obviously more overvalued)
2) Huge unemployment - People losing their jobs at high rates will obviously have an effect on housing prices.
3) Interest Rates - Dramatically higher interest rates = Rapidly declining prices.
Now I'm under the impression that unemployment is heading down and interest rates are still at record lows...so other than being slightly overvalued as a whole (a few markets not withstanding), how are we going to see this 50 - 60% decline in pricing? What will force the homeowner (not investor who's maxed out) to sell when he a) has a job still and b) is renewing his/her mortgage at record low rates. I'm confused...I know it doesn't help the majority of people in this thread who've been hoping for years on end for a crash, but at some point logic has to come into play.