6 ms·
> "The key word is, 'triggered,'" said JunJie Wu, an OSU economist and one of the authors of the paper. "This theory recognizes the role of subprime mortgages a
by chrisan 5y ago
> "The key word is, 'triggered,'" said JunJie Wu, an OSU economist and one of the authors of the paper. "This theory recognizes the role of subprime mortgages and lax lending practices as inflating the housing bubble, but high gasoline prices provided the trigger that burst the bubble."
Are we in another bubble? And if so what is the theory for why? I assume subprime and lax lending wouldn't be the cause after the lessons learned from last time
- newsclues 5y agoCanada’s housing bubble didn’t pop a decade ago, and continued to inflate.
- etimberg 5y agoHousing in the Toronto area has been even more insane than usual the last few months. Houses an hour away from downtown that were selling for ~850k in November 2021 were selling for $1.05M in January and February.
- Ensorceled 5y agoAll of Southern Ontario really; prices in Midland, Owen Sound, etc. etc. are all much higher.
- newsclues 5y agoI live two hours from Toronto and a house in a bad area of town that I personally know was a crackhouse 2 years ago, sold for slightly under half a million and is getting gutted and renovated into a duplex. Last time I was in the house, crackheads were shitting in buckets. Literally. And there isn’t a lot of good jobs here!
- abeppu 5y agoIs there a convincing explanation of why the US and Canadian markets behaved differently? Were Canadian banks smarter about what loans were issued? Not being a Canadian, most of the stories I hear about Canadian real estate are about international investment by the global rich -- is that a large enough share of market to support prices even through a recession?
- namelessoracle 5y agoWhy wouldnt it be?
- newsclues 5y agoCanadian economy is less diversified and overly reliant on housing as a component of GDP, so policy has been distorted by the housing market and the corruption/money laundering that goes along with it.
- treis 5y agoNot a bubble because for the most part people are buying homes that they can pay the mortgage on. High energy prices are also going to spike inflation which eventually means rates rise. If that happens owners with their 2.75% mortgages aren't going to be inclined to sell. Coupled with higher new construction costs the housing market probably continues to rise.
- andrew_ 5y agomakes me wonder if student loan default en masse could follow this time.
- chinathrow 5y agoHow would that work? I thought most US based student loan can't be defaulted on.
- sbelskie 5y agoDefaulting just means you have not made required payments for a certain period of time (270 days for student loans), so anyone can default.
- jessaustin 5y agoIt can't be discharged through bankruptcy (thanks Joe!), but neither can we squeeze blood from stone. Debtors who don't have the funds to both eat and make their payments will not make their payments.
- mumblemumble 5y agoI assume that by Joe you mean Joe Biden? Student loans haven't been something you can discharge in bankruptcy since the 1970s. If you want to thank a US president (as opposed to, say, the legislature that actually passes these laws), you should be thanking Gerald.
- 5y ago
- rossdavidh 5y agoWell, house prices have gone up far faster than incomes, for years now, in the US and also several other countries around the world. One driver is the purchase of real estate as an inflation hedge. This doesn't prove it's a bubble, but it sure does suggest strongly.
- panick21_ 5y agoA bubble is a purely analytical judgment in hindsight. Will at some-point prices be lower then now. Probably yes? Maybe in 50 years? Maybe tomorrow? Many people have many theory why something is a bubble or not. And what time frame prices have to go down to call yourself correct. Anybody that claims to know is a charlatan. Many of those get proven right once in a while.