James Rider

Trend Following CTAs: No Panacea

www.fxvolresearch.com/...

Trend Following CTAs: No Panacea

www.fxvolresearch.com/...

Canadian Real Estate Slows Inexorably- Part III

The idea that everything is for the best in the best possible worlds in Canada vs. the US housing market is a fundamentally flawed concept. There are some some uncanny similarities in Vancouver to places like LA where debt to saving ratios, house prices to rents, average incomes to median house prices all look very similar. Canada does not have the same degree of questionalbe mortgage backed lending that occurred in the United States, that is true, however there were for a time 40 year mortgages and generally the banks in Canada also fell into the same trap as those in the US, namely the belief that prices only go up. Real estate values are not independent of the willingness to lend. As economic conditions in Canada worsen as energy prices and commodity prices remain weak, credit conditions will deteriorate, unemployment will rise and house prices in those highly over leveraged markets out west will collapse in a similar fashion as they did in the early 80's after an early commodity price boom bust cycle.