Quote:
Originally Posted by Carl Johnson
If U.S. job market significantly improves this year which I think it probably will then Fed will have to stop Large-scale asset purchases and basically go back to a standard policy stance for a normal operating U.S. economy. Rates both short term and long term will liftoff in this case.
I am in the camp that U.S. housing market will diverge big time from Canadian market in the next 5 or so years. American households cut down a lot of debt during the crisis and with job market on the mend rates increases won't hurt them as much. Housing affordability still very reasonable even with the big increase last year.
We Canadian on the hand is completely opposite. Consumer leveraged up the the max here in Vancouver and nationwide really. Job market stalled. A lower loonie will help our exports but companies haven't invested much in their businesses or moved factory offshore coming out this 08/09 crisis therefore a larger currency depreciation won't stimulate the economy as much this time. If rates go up here I think a lot of homeowners will be in trouble. I'm not predicting a crash but I am definitely prepared for it if it does happen.
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I agree with you that us Canadians are leveraged up the max here in Vancouver and nationwide, this is whats scary as reported by RBC-
(Detach bungalow)
Ottawa,Montreal,Calgary,Edmonton-Mid 30's% pre-tax income.
Toronto-56% of pre-tax income.
Vancouver-84% of pre-tax income.
It looks like we are the biggest gamblers when it comes down to housing, putting almost everything on the table.