The

Pin

Has Found The Bubble! 

Canada’s Majestic Housing Bubble Deflates, 

Media Hype U-Turns

National home sales across Canada slipped for the second consecutive year, dropping 11% when compared to 2017. It was indeed the steepest annual decline since the Financial Crisis in 2008. As a result, the average home price leaked lower to $488,699, a 4% decline from last year. The decline marked the first year-over-year drop since 2008, when the national average slipped a mere 0.71%. 

But as Shiller writes, all mania’s eventually come to an end, and the media plays an equal role in compounding the role of public sentiment in the opposite direction.

As Investors Flee Australia’s Housing Bust, Sales of New Houses Plunge to Record Low

And this time it’s not rising interest rates that have caused the downturn: Mortgage rates in Australia are near record lows, and the policy rate of the Reserve Bank of Australia is stuck at a record low 1.5%. 

Instead, the downturn was triggered by sky-high prices in one of the world’s most fabulous housing bubbles that smacked into a regulatory crackdown on some of the elements that had made those sky-high prices even possible: Mortgage fraud, bank wrongdoing, reckless lending, and excessive property speculation aided and abetted by the banks.

No More TV and iPad Giveaways for New Zealand Home Buyers

Would-be home owners are instead being scrutinized more than ever before to ensure they can service a loan, mortgage brokers say. The change in attitude is tightening the screws on the property market and raising fears that New Zealand could join Australia in seeing house prices start to slide.

DYI:  The long awaited worldwide recession in my judgment has begun.  How long will the United States hold out before the ripple effect sets in is anyone’s guess.  It appears the slide will be felt this year, if not; then very early 2020.  I’ll keep my eyes wide open for any concrete signs for an American downturn.

 DYI