No trigger for a Canadian house price crash: CIBC economist

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No trigger for a Canadian house price crash: CIBC economist
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  z+ |5 d; K' E( W, @, H' bCanadian house prices may continue to slide but there is no sign of a crash, a CIBC World Markets economist says. (CBC)Canadians haven't put themselves deep enough in debt to cause a U.S.-style housing market bust, a CIBC World Markets economist says.
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7 G6 l2 h7 x( I2 k4 q" D: `0 AIn a report issued Tuesday, Benjamin Tal asks: "Where's the trigger for a Canadian house price crash?" He concludes there isn't one.

: ^7 `$ w7 i+ X  U1 R. ^3 o1 n"To be sure, house prices in Canada will continue to ease in the coming months," he says. "But the triggers that led to a free fall in Canadian real estate markets in the early 1990s and today in U.S. markets are nowhere to be found."
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As he sees it, Canadian home buyers never got as reckless as Americans.
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"By almost any measure, American households entered the current housing crisis from a more vulnerable position relative to their Canadian counterparts — carrying a heavier debt load and a much lighter net worth position. And when it comes to real estate speculation, Canada was not really a player.
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3 ~2 e% Y$ L& t3 G9 L7 |! b"But even more important than the absolute and relative level of debt is the distribution of debt. At the peak of the cycle, subprime and Alt-A mortgages accounted for no less than 33 per cent of originations in the U.S. market. In Canada we estimate that at the peak, non-conforming mortgages reached 5.4 per cent of originations."

Subprime mortgages are those given to the least creditworthy borrowers. Alt-A mortgages are considered a step higher, although the category includes so-called liars' loans in which borrowers are not required to verify their earnings or assets.
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  l0 p7 x8 I0 L5 M5 HTal says the U.S. meltdown is basically a subprime story.
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1 \6 H8 B5 U* I) C8 X: w+ F! o"Eradicate subprime from the U.S. housing market and, instead of the most severe house price meltdown since the great depression, you get a trivial moderate cyclical slowing — something along the line of what we are currently experiencing in Canada."