 鲜花( 0)  鸡蛋( 0)
|
No trigger for a Canadian house price crash: CIBC economist
& p8 |2 J, y& p1 y- Z* V! e5 }$ w& A) ?! K- f7 [
Canadian house prices may continue to slide but there is no sign of a crash, a CIBC World Markets economist says. (CBC)Canadians haven't put themselves deep enough in debt to cause a U.S.-style housing market bust, a CIBC World Markets economist says.* ^' u/ \! N5 {& s
+ a- q* u* D2 [( f7 K+ e$ \! W
In a report issued Tuesday, Benjamin Tal asks: "Where's the trigger for a Canadian house price crash?" He concludes there isn't one." {, @3 O, ?( D
* j5 P2 z- ^4 C; c. u
"To be sure, house prices in Canada will continue to ease in the coming months," he says. "But the triggers that led to a free fall in Canadian real estate markets in the early 1990s and today in U.S. markets are nowhere to be found."; e ^1 y3 l+ G o
, _, k* [4 g% x0 t+ l. ZAs he sees it, Canadian home buyers never got as reckless as Americans.
7 D! J' C o }3 S Y) _( `/ E- E) `3 M, V
"By almost any measure, American households entered the current housing crisis from a more vulnerable position relative to their Canadian counterparts — carrying a heavier debt load and a much lighter net worth position. And when it comes to real estate speculation, Canada was not really a player.6 X8 ?! M! l d- L, x/ b( Y$ d" m! V
( [, {: V% V! y& G, z8 J"But even more important than the absolute and relative level of debt is the distribution of debt. At the peak of the cycle, subprime and Alt-A mortgages accounted for no less than 33 per cent of originations in the U.S. market. In Canada we estimate that at the peak, non-conforming mortgages reached 5.4 per cent of originations."
$ u# p6 X; F Y9 p) V. O5 X1 |9 Z, q1 ?, G9 u' t+ | J
Subprime mortgages are those given to the least creditworthy borrowers. Alt-A mortgages are considered a step higher, although the category includes so-called liars' loans in which borrowers are not required to verify their earnings or assets.
4 q7 o- v8 i( V2 y, V$ ~' }& x- A& V7 s$ r5 V
Tal says the U.S. meltdown is basically a subprime story.
- f0 J( h) |; _, M4 u$ Z X e6 W6 |4 ~
"Eradicate subprime from the U.S. housing market and, instead of the most severe house price meltdown since the great depression, you get a trivial moderate cyclical slowing — something along the line of what we are currently experiencing in Canada." |
|