Andy McKay

Oct 26, 2011


This article on house prices annoyed me this weekend. Realtors want special dispensation for houses purchases because of the HST. Because nothing, absolutely nothing must stop house prices rising and the profits flowing for realtors.

We all know Vancouver house prices are in a bubble:

Bank of Canada, June 2011

Meanwhile salaries are mostly stagnant, meaning affordability is worse than ever. But this is the advice from realtors:

advice for prospective homeowners in their 20s who are questioning whether they should wait for prices to come down: Don't wait, borrow from mom and dad.


Borrow more and borrow from your parents. Keep borrowing. How could that go wrong?

Older Canadians are nearing or entering retirement more indebted than ever before, piling on debt at a much faster pace than their younger counterparts


This can be a real problem, as the article discusses, depending upon on why the debt is being accumulated. But chances are if you are accumulating debt to allow family to pile on the debt to buy a house, that's not the safest long term investment with a chance of good return.

It is one thing if you are accumulating debt because you anticipate liquidating some other form of capital down the road, she said, such as planning to sell a cottage in 10 years to pay off debt. But if it is debt created simply for consumption purposes, it can create a longer-term financial crisis.


I can't but feel that when interest rates rise, things will change quickly.