56 LEXPERT MAGAZINE
|
JANUARY/FEBRUARY 2017
IN-HOUSE ADVISOR
Crash
Governments
looking to avoid a
real estate collapse
are cracking down
on easy mortgages.
But with low interest
rates, will the new
rules do anything
other than penalize
brokers and
lenders?
BY ANTHONY DAVIS
Course
HILLIARD MACBETH KNOWS MARKET DOOMSAYERS LIKE
him are oen taken for fools — at least, that is, until their prognostications
about bursting bubbles prove painfully true. By then, of course, it's too late to
avoid a market crash that can punch gaping holes through an economy, destroy
businesses and rip apart people's lives. MacBeth is the Director of Wealth
Management at Richardson GMP in Edmonton and also the author of a book
that would alarm any current or aspiring Canadian homeowner — or for that
matter, any executive working for a mortgage lender.
Published in 2015, Hilliard's book is entitled When the Bubble Bursts: Sur-
viving the Canadian Real Estate Crash. In it, he argues that Canada's housing
bubble — which has expanded far beyond the scorching markets of Vancouver
and Toronto — is about ready to pop. Residential real estate is way overvalued.
Canadians are carrying unprecedented levels of household debt. All it would
take, he argues, is a slight uptick in interest rates — just a percentage point or
two — and a large number of homeowners could be pushed over a default cliff.
It's a scenario that the feds are taking seriously, if the recent tightening of
mortgage rules is any indication. In the years leading up to the financial crisis
in the US, the federal government had actually been trying to stimulate demand
for housing. en Canadians, protected by a regulatory firewall, watched from
afar in 2007 as the US housing market crashed, taking out such banking titans
as Lehman Bros. and Merrill Lynch. Since then, the government here has at-
tempted to engineer a "so landing" in housing with gradual policy reversals
that have had little effect in the wake of historically low interest rates.
PHOTO:
SHUTTERSTOCK
