I believe Canada is headed for a crash. The only thing the bank's have accomplished is to buffer the ultimate fall. The biggest problem to this farce is the media. Media giants have their own stake in the markets just like everyone else and if they can sustain a false sense of well being they will do it. I live in Toronto and listen to the #1 AM news station here. What is incredible is how they always get bankers or investors to analyze the daily market trends. I can predict exactly what they say before they come on....that's because it's a conflict of interest and they will never say anything that's going to hurt the industry. It's like asking someone on death row to comment on whether they should abolish the death penalty...for once I'd like the media to get some University Professor who doesn't have a stake in anything to comment. Then we'd find out exactly where we stand.
The low interest rates created a mad frenzy to head out and purchase a house before "it's too late!" The sellers said "hey now people can afford more so I'll just raise my price accordingly". So instead of a healthy market where a house should cost $250k the interest rates have gone down and inflated the market so that a house now costs $350k. So lowering rates did nothing to make buying a house more affordable!! What's more it pushed everyone into a state that they needed to get on now before it's too late....whether or not they were ready. The cost of owning a house for the time being is not cheaper (because rates have gone down - this is what real estate agents will tell you)...it's higher because of the mad frenzy.
But one thing hasn't changed. I haven't seen my salary go up in the last decade, instead it's gone down roughly 10%. For the first time ever I was unemployed last year and just couldn't believe how difficult it was to find a job. I've changed jobs several times in the last 15 years and it was relatively painless. I'd send out several resumes and within a month I'd have something. Last year I went unemployed for almost a year but luckily found something. I could feel the tension in the job market....it wasn't nice.
The advice I have for anyone staring out is to:
1) don't have more than one credit card...and never keep a balance.
2) keep an emergency fund of several months salary
3) Rent until prices fall then buy the house with at least 25% down
4) buy furniture, tv sets, etc with cash! never on credit!
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