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Are you a realtor? I think you missed the point of this video and the title as well. I am a mortgage broker in Toronto and I can see that you don't understand what was being said here. The person in the video said nothing so general as there won't be a housing crisis in Canada, he was speaking to the sub-prime scandal in the US...on that story (which is the subject of this video) he is absolutely right. He didn't say anything about the market being impervious. Also, please find me an actual zero-down mortgage; seeing as you can't get mortgage insurance for a mortgage like that, then you must be getting it from the back of a van. Please tell us the basis for many comments you make here and your educational background. If you are going to make an argument against something, please back up your points rather than running your mouth. Do you have anything bad to say about mortgage brokers? I'm sure you do. Those in ignorance often lash out at that which they don't understand.

How did you find this site akiko and why do you care?  Are you trying to correct what you perceive to be misinformation provided by this site?  As far as I can tell, the only "fact" you take issue with is zero down mortgages.

They exist all over the place, here are some links:

http://www.canequity.com/no_money_down_mortgage.stm

http://www.canadasbestmortgage.com/zero_down_mortgage.html

http://www4.bmo.com/personal/0,2273,35649_36730,00.html

http://www.mycanadamortgage.com/

http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20061006/mortgage_deal_061006/20061006?hub=TopStories

Are you suggesting sub-prime lending doesn't exist in Canada?  That a reversal of price growth cannot trigger a crash when people can no longer extract home equity via lines of credit to finance the consumer lifestyle?

As to what the realtor was speaking to and what his point was, is it not to reassure potential home buyers that the same can't happen here, that there is no housing bubble in Canada, based on there being no "subprime" in Canada?

As far as my education... whatever, it doesn't have anything to do with the validity of my arguments.  Are you saying that if I was "educated" I wouldn't make those kinds of statements?  What about Robert Shiller, would you suggest his educated statements about irrational exuberance of the dotcom and housing market were made because of or despite his education and intelligence?   Are you suggesting realtors and mortgage brokers are on the whole better educated than the average Canadian?  That is, of course, debatable.  Last time I checked, neither group was credited with any general economic or financial expertise.  It's not like they are authorized to sell mutual funds or offer stock tips or investment advice.

You may disagree on whether the market is heading south here in Canada - after all, it affects when and how you get paid - but before you lash out in ignorance, make sure you know what you are talking about.

We have our fair share of liar loans out there. But we don't have those teaser rates and our economy is doing better than the US. Can liar loans alone crash the real estate party?

Abbotsford Realty,

That's a good question, I would suspect probably not, that's what I was getting at originally with my comments  - it could be a variety of other factors that don't mirror what happened in the US.  In other words, just because conditions here don't mirror what was happening in the US doesn't mean that they can't cause a reversal or crash.  I guess I also take issue with applying the US MSM definition of "subprime" to Canada and then declaring "we're safe" on that basis.  I tend to think not, that's why I gave the examples of zero down, 40 year amortization, unaffordability and buyer exhaustion.

Maybe add "overstated self-employed income to the list."  I was talking to a loan officer who suggested self-employed income could be exaggerated to match "real income", as opposed to what was being reported to Revenue Canada.

I also think that any reversal in price growth could trigger the same problems for a lot of people who borrowed against equity to purchase investment properties.  Thanks for your comment, welcome to the blog.

Interesting comments here. A lot of people try to mirror what is happening in the U.S. with what "could happen" here. Overpricing, inflated markets and the like can always impact the real estate market but I don't see anything in that video that is really off the mark. The biggest factor with the sub-prime problems in the u.s. wasn't just the teaser rates but the zero-down factor. It is true that the U.S. style sub-prime problem cannot happen here. Mortgage insurance and true zero down mortgages aren't given by any major institution. If you get your financing from the back of a truck then of course you are rolling the dice. Some institutions like mine (I'm sure you can guess from the user name) have extended mortgages out to the 40 year mark of coursebut that's a different set of problems for people. I think that video is meant to calm people down a bit when they see all the craziness on CNN etc. We also get many people asking us those questions and we essentially tell them the same things. You can always say a realtor just wants to sell a house or a bank just wants to hook you into a loan but the whole idea is for the bank to make money, not let people default. It's also rare here for a major bank to throw mortgages to "loan shark" banks after the fact...another problem down in the u.s.

As far as the over-stated self-employed income, banks require 2 years of income proof in the form of tax reciepts to count it towards a mortgage or any financial transaction for that matter. Again, go to a non-accredited institution and you are gambling; but people get what they deserve if they do that really and should know better.

I would ALWAYS suggest people use a mortgage broker (don't tell my boss) and then take the documents to a real estate lawyer before signing. Even with all that's happening down south, the writing in those contracts is pretty clear, albeit hidden amongst a million other clauses etc. I can't tell you how many people have sat in front of me to sign for their mortgage, I tell them I'm going to go through the papers for about 30mins and explain everything...then they say "no I trust you" and just plop down their name...insanity.

Bottom line, a u.s style sub-prime crash can't happen here....can a bubble burst? of course...can people get sucked into a mortgage they may not be able to afford? of course. Hey, I'm a guy making almost 6 figures and I still can't afford to buy a detached house in Vancouver...between paying off 15yo student loans, paying for gas and saving for retirement, I'll be lucky if I can afford to eat. I've given up on buying in the lower mainland and am looking to buy overseas.....beachfront detached house in the Caymans for $650,000 or a 3br apartment in downtown Vancouver.....hmmmmmmmmmmmm

BlueGoldBanking, thanks for the thoughtful post.  What got me thinking originally was the rather generic statement that we don't have the same subprime problems here, so the results won't be the same as what happened in the States.  Definitely sounds like a reassuring message, but is it realistic?

At the moment, inventory in the Fraser Valley is heading to an all-time high and Vancouver inventory is higher than it has been for years.  Inventory in Victoria is also higher than it has been for quite a few years considering the time of year.

However, prices in all these areas are still high relative to incomes.

I don't know the exact set of events that will pop the bubble, but I do subscribe to the belief that there is a bubble, and that there will be a correction.  How widespread the damage is, we won't know that for a few years, I suspect.  Just like in 2005, when nobody in the US could call the outcome (except maybe Shiller, Schiff and Roubini), all the debate right now about whether there is a bubble or a subprime problem in Canada won't result in a clear cut vision of the outcome, but I do think it points to the fact that the paradigm is shifting.

A US style housing crash may not be in the cards, but I suspect a housing correction of 20-35% in nominal terms would be quite predictable.

Personally, I hope it happens, because for every over-leveraged, cash-strapped boomer who loses out, who spent their paper equity without selling their house, a young family or professional with a decent job but no equity can benefit.  In the long run, this would be far healthier for the economy and society in general.

Thanks for the contribution to the blog.