The estimable economist Sherry Cooper is back in the news with her carefully considered concerns for the value of Toronto homes. Like others, she warns of too much household debt and is wary of an overheated market, mainly in condominiums. These concerns are cast against the U.S. where in many places conditions are still quite bad. Will the infection cross the border? The essential factor of any catastrophic drop in prices is a glut of units. In the U.S. people with means still want houses, but there are just too many units left over from the insane construction of the past 20 years to push prices up much. The building was fuelled by the determination of certain American legislators like Representative Barney Frank to funnel billions of dollars into mortgages for people who had no chance whatsoever of paying them off. In many cases, they had no intention of paying the money back. In Canada, the banks, including Ms Cooper’s employer, Bank of Montreal, have applied basic principles which protect the market. In other words, to borrow money for a house in Toronto you have to be more than simply poor. This is not as callous as many will say because when the housing market collapses, everyone suffers. Carolyn Ireland, Globe and Mail Housing collapse hurts the poor too
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The estimable economist Sherry Cooper is back in the news with her carefully considered concerns for the value of Toronto homes. Like others, she warns of too much household debt and is wary of an overheated market, mainly in condominiums. These concerns are cast against the U.S. where in many places conditions are still quite bad. Will the infection cross the border? The essential factor of any catastrophic drop in prices is a glut of units. In the U.S. people with means still want houses, but there are just too many units left over from the insane construction of the past 20 years to push prices up much. The building was fuelled by the determination of certain American legislators like Representative Barney Frank to funnel billions of dollars into mortgages for people who had no chance whatsoever of paying them off. In many cases, they had no intention of paying the money back. In Canada, the banks, including Ms Cooper’s employer, Bank of Montreal, have applied basic principles which protect the market. In other words, to borrow money for a house in Toronto you have to be more than simply poor. This is not as callous as many will say because when the housing market collapses, everyone suffers. Carolyn Ireland, Globe and Mail