Home Guy wrote in :

harry wrote:

Canadian property bubble,

House and condo prices have declined during the past 6 months to a
year, or have showed zero growth during that time frame.

The differences betweed US and Canadian residential real-estate
markets a

1) No ARM's, no no-money-down mortgages here in Canada.
2) Anything less than 25% down requires mortgage insurance.
3) Very little speculation done by the average home owner (ie - very
few second homes being purchased out of pure speculation)
4) We don't have the equivalent to Nevada, Florida, or other
locations where second homes used as vacation homes can be
built
5) We can't deduct mortgage payments from income tax, which limits
speculative home buying and bubble-forming price increases.
6) Our banks did not re-package mortgages into fancy derivative-
based products, and because of that our banks did not and do
not cut corners when qualifying potential mortgage borowers.



There are more differences:

7) Canadian homebuyers cannot refinance an existing mortgage at a
new, lower rate, without paying a penalty to do so. That penalty
is formulated to make it financially unfeasible to break the
original contract.

8) Canadian homebuyers cannot escape their legal obligation to
fulfill the terms of the contract (i.e.: pay it off) by simply
handing in the keys and walking away from the home.

9) Unlike the US, Canada does not use legislative and policy measures
to force banks to tease people into real-estate debt.


The US housing bubble was created by the shiploads of artificial credit
conjured up by the Fed. Canada also creates artificial credit, but not to
the same extent, and without accompanying legislative idiocies like the
Community Reinvestment Act.



--
Tegger