Have you noticed any spillage from the mortgage thingie going on in the states in Alberta ,with those homes at around 300k I was curious if the practice had crept over the border.
Declan
We’re not seeing the kind of crash you are, I think primarily for two reasons: The first is that the amount of home construction that’s taking place is very much limited by availability of construction workers and materials, so the damage is probably more limited, and because we don’t quite have the crazy sub-prime mortgages you have. So I’m not expecting a huge crash in real-estate or major loan defaults.
However, real estate inventories are rising dramatically, and prices actually fell slightly last month. The real estate pros are still predicting a 10% climb in prices in the coming year, but I have my doubts. I think we’re at or near the peak, and prices will begin to retreat somewhat. Whether there will be a major crash in prices or they just sort of level off and drift down a few percentage points and stabilize is an open question.
The thing about Alberta is that we still have major labor shortages, so that’s also going to limit the damage. The people who bought houses at inflated prices at least have decent paying jobs and no prospect for prolonged unemployment. We can probably weather a decline of 10-20% without a major shakeup other than in the housing construction business.