Monday, February 20, 2012

MSM slowly waking up to Canada's real estate bubble

We all know the anatomy of a recession, right?  For those who don't, recessions tend to follow this general pattern.  Insert government and market 'experts' where you see the word 'we'.

Stage 1 -  Denial
The fundamentals of the economy are strong and 'we' anticipate continued growth.

Stage 2 - Limited Recognition
While there appears to be some stress in certain sectors of the economy overall the fundamentals are sound and while growth may moderate 'we' continue to project growth.

Stage 3 - Predictions of a soft landing
It has become evident that the economy is showing signs of weakening, however because the underlying fundamentals remain strong 'we' do anticipate the possibility of a recession but anticipate it will be strictly technical and very short in duration.

Stage 3 - Capitulation
Uhm, 'we'...meaning you...are f###ed.

Now wherever you see the word economy, replace it with housing market.  And where you see the word 'we', replace it with government types, mortgage professionals, real estate agents and anyone whose income is bolstered by a surging real estate market. 

I'm sure some will continue to disagree, predictions of a bubble bursting have been around for at least a couple of years now...same as they were in the U.S. before their market imploded.  Someone who just took on a massive mortgage on a Toronto condo isn't going to like hearing that their biggest asset is going to crater over the coming years. 

And who knows, maybe they can pump some more air into the balloon before it pops.  Maybe we'll see mortgage rates drop to 2% with a return to the sub-prime lending practices we had before...40 year mortgages with zero money down. 

But I doubt it.

Recognition is starting to seep into mainstream media.  Just google Canada Real Estate Bubble and you can read all about it, click on the bulleted links if you dare:
 For those in the minority camp who don't own a home....when might be the time to dive into the market?  When everyone is saying that real estate is the last place to invest. 

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