Wednesday, September 19, 2012

Predictions of a soft landing for housing a sure sign the jig is up

If you've lived through a couple of recessions or more then you know the value of so called expert advice.  When the economy starts to slow, financial professionals and politicians all talk about strong fundamentals and how a recession isn't in the cards.  Later when cracks start to appear they trumpet the 'soft landing', which is a sure sign the economy is about to tank.

The same script is being used in the housing market now.  The latest comes from Scotiabanks CEO:

At worst, housing market headed for soft landing: Scotiabank CEO

Not a good sign, not from here in the cheap seats.  For those who bought in over the last 5 or so years and don't need to sell, its only a paper loss.  But for those who have to sell their home, be it for financial reasons or because of a move...well finding a buyer will likely prove difficult for the foreseeable future.

Lending rules have been tightened and carrying costs are higher now because there are no more 30/35/40 year mortgages to be had.  Just the standard 25 year amortization that was the norm before the Harper government started puffing air into the bubble with insane ams and zero money down.  Add the lax lending standards applied by the banks thanks to government insured debt and it was a recipe for the meal that's just starting to be served.  

Those selling should prepare themselves for low ball offers, its a buyers market, something Canada hasn't seen since the early 90s when house prices were hammered.  

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