Josh Sigurdson talks with author and economic analyst John Sneisen about the risks the Canadian housing market are seeing as the bubble continues to gain pressure all while interest rates rise.
Prices have been rising dramatically in many local housing markets throughout Canada to a level that cannot sustain itself.
In recent months, the rallies have been met with some volatility as home resales went down 13.9%, overall 11.9% lower than a year earlier.
People ignorantly thought this would just mean more affordability in housing markets like Toronto and Vancouver. Well, on come the rising mortgage rates.
The mortgage payment on a representative home has risen 1.2% in just the first quarter of 2018 alone. Mortgage payments were up 3.4% in Vancouver and 1.2% in Toronto.
It takes 80.3% of an average household income to afford a mortgage on a representative home in Vancouver. 68.4% in Toronto.
This is completely unsustainable. For years, with glassy eyes, people bet on a vastly inflating housing bubble, believing it was going to go up forever. We warned people here at WAM but people told us we were wrong. It was more comfortable to believe that it was going to hit the moon in the next galaxy.
People bought homes because they saw TV shows where people bought, fixed up and sold homes. It looked easy. They thought, no matter what, they were going to profit. Now with this downturn, many people will go bankrupt and it’s due to a lack of financial responsibility and understanding.
Individuals must know the market they get into. Individuals must understand money. Individuals must be responsible and self sustainable, not to mention very educated to take upon such risk.
The fundamentals are off the table due to the level of manipulation in the markets as well as the monetary system so crashes can’t be mapped out to the date, we just know it’s inevitable which is why people should be prepared. People need to stop looking at their house as an asset and instead prepare themselves for the future with investments and assets they properly researched and understand. Historically prevalent wealth insurances.
We hope people heed the warning.
Stay tuned for more from WAM!
Video edited by Josh Sigurdson
Graphics by Bryan Foerster and Josh Sigurdson
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