You do relize the same thing will happen in Alberta in the next few years right? People are making big money now but when that money drys up we are going to be in the same sittuation. People that were poor, or lower income are now earning 100k a year. But when the construction boom slows how are they going to pay for their 300-500k mortages?
I could have got a mortgage as well. I didn't because I knew that when the government had low interest rates too long that it allowed people to buy easily so they could flip for quick gains (gambling) and the demand for housing in Alberta was huge so the prices went through the roof. At some point interest rates could not go down any further and people would be in so much debt they couldn't keep flipping the houses to other suckers. All you would need is a drop or even leveling off of prices for people to not be able to sell at the price they want and also have little money left to keep making payments.
Who said that they should have bought when they did, and why didn't they save more money and put downpayments? Greed led people to think the prices would go up forever no matter how unlikely that would be. Few people ask questions about how people spend money in regards to lifestyle. It's called priorities. My dad bought at the wrong time and had to take whatever jobs he could and he put as much money into the mortage and paid it off. It wasn't fun but he honored his contract.
People should take responsibility for themselves. If they don't have a large downpayment on a house then they shouldn't get it. If more than 30% of your pay goes to mortgage payments you shouldn't get one. People knew that the government (taxpayers) would back them up to avoid recessions, (because they are political fodder), so they kept doing it anyways.
Many people will do like they always do. Go to Alberta and eat when the eating is good and go back east. Many I know live in New Brunswick and Newfoundland and just rent spaces in Alberta and send excess cash to their families in the east to buy cheap property. Things have already slowed down. Many are going to Saskatchewan. Some are addicted to drugs and blowing their money. At which point do people take responsibility for themselves and their choices or they pass the buck to the government.
All I can say is that there is no free lunch. Printing money causes inflation which is a cost. Getting the tax payer to bail out people is a cost. Or people tightening their belts and paying off their mortgage is a cost. You can't avoid the dual nature of exchange. You want a house? Pay for it.
This is why people like me rail about how so few people today really save any money at all. Throughout history we have lessons like "the fat cow and the lean cow", "the ant and the grasshopper." People don't get it. The stock market should not be treated like a casino.
The housing market was treated like a Casino. Alberta didn't have as many subprime mortages and the conservatives have been paying down debt federally so we will get hurt by the slump in the U.S. but not as bad. We have to start over and governments shouldn't be priming the pump and lending 40 year mortgages with no downpayment. Lowering the interest rates down to practically 0% is giving an incentive to go into debt. It keeps happening almost every 5 - 10 years now.
In the end if people don't want to earn 4% interest on their investments and grow over time they will always resort to gambling. "I want 20% return." Well then take the risk. Even high interest rates can't completely stop gambling if people are willing to do so. Older generations knew there was going to be a recession at some point and the younger ones thought it would go up forever. There's a sucker born every minute.
My brother has a wife that demanded a larger house no matter the cost and he said yes. Now he has 2 mortgages and if he loses his job he will have to deplete his savings to stop forclosure. He felt the economy would be doing good because of Chinese demand for oil. What is this? Gambling! He knows big shot investors that have 5 houses that they have to bankroll. Even if you make 500,000/year you're going to be sweating. McCain, Bush, Obama, Clinton. None of these guys can stop greed and stupidity completely. All they can do is try not to have perverse incentives and useless regulations. The rest is up to us. We are the economy.
There are some smart people out there that did what I did and waited the market out. Soon there will be mortgages with a reasonable cost and I can enter at the right time. If something happens while I pay it I will have savings to keep my house. If I have to lose my pride and get a crappy job to make ends meet until I get a better one you bet I will do what I can instead of complain. People need to cultivate self-discipline.
If people didn't buy big screen TV's and expensive cars and multiple vacations they wouldn't be so hard up. I know a lot of people got into consumer spending and didn't prioritize right, but the media and politicians don't talk about it because they don't want to get criticized by those very same people. Does anybody ask the question "why did you spend on vacations or home decoration when you could have put that on your house?"
Dr. Frankensteins Wall Street by Victor Davis Hanson on National Review Online
This is the only guy I heard mentioning this.
An Old Story by Michelle Malkin on National Review Online
She talked about an old story.
These are life lessons people can learn. I just wish they would.