Thursday, January 6, 2011

Seriously Royal LePage?

Home prices expected to rise further: Royal LePage
Home prices will continue a "moderate and steady climb" this year, helped along by an improving economy and low interest rates, according to a report released Thursday.
Okay, Royal LePage (if that is your real name) I have a little chart for you. Below is the monthly % change in prices in Vancouver, Year over Year. Do you notice a trend? A really strong trend? Squint and I bet even you can see it.
Vancouver House Price Change Year over Year Dec 2005-Dec 2010
Also, you cite low interest rates as part of your reasoning for Canadian households to burden themselves with even more debt, even though mortgages are typically 5 year adjustable. On a 35 year mortgage, that's called a teaser rate, and it will have exactly the same consequences as teaser rate mortgages in the U.S. Oh, and by the way, Canadian banks are hoping for government-imposed change in mortgage terms back to 25 years, max, if not 10% down. How does that fit into your plans?

At some point the shilling becomes flat out irresponsible.

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