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No trigger for a Canadian house price crash: CIBC economist

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发表于 2008-9-30 17:24 | 显示全部楼层 |阅读模式
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No trigger for a Canadian house price crash: CIBC economist  Z- t# E( J$ [* Z# L& ^, K
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Canadian 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.% \( @. x! A, [, q$ }. ^4 p0 `9 f

; j# p/ s3 c6 c" ]9 {+ |, EIn a report issued Tuesday, Benjamin Tal asks: "Where's the trigger for a Canadian house price crash?" He concludes there isn't one.
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$ z/ H( K4 M' v2 M( ^"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."2 d% @% a; L, `4 R

$ J$ n* e" `- Z8 l2 }4 |As he sees it, Canadian home buyers never got as reckless as Americans.5 w( t! E( F2 o  l. l' I. H" @/ W
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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.- }# \+ t0 B( t" S6 A( j
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"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."
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# J( a: r. w- u# mSubprime 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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Tal says the U.S. meltdown is basically a subprime story.# }9 }+ z! W/ D- B

0 T+ ]: O1 ]7 m9 P2 @0 f) N$ L"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."
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