Garth Turner (Canada’s version of Peter Schiff?), Halton Member of Parliament, businessman, and real estate investor shares his opinions that Canada (Calgary as well) is not immune from the subprime crisis.
The must-read article brings home what bubble bloggers have been discussing over the past years about the hyper-overvalued real estate market in Canada. Overextended young buyers, double income requirements, 40 year mortgages, 0%-5% down-payments, assumables, etc. are all elements endeavouring to sustain the unsustainable. Some common marketing-machine driven real estate myths from the article:
1.) Unlike stocks, real estate is a riskless investment.
2.) Houses [always] appreciate
3.) Canadian lenders are more conservative [than U.S. subprime lenders]
4.) Industry experts are worth heeding
5.) You need some place to live anyway
6.) A house is a great investment
7.) Better to be an owner than renter
8.) Rising markets are normal
9.) Real estate profits are tax-free
10.) Canada is different
11.) Alberta is different
The addition of #11 (in relation to #2 on the list) to the list is a colloquial misconception in the province of Alberta. The hollow validation that because Alberta possesses energy resources, paying half a million dollars for an average house in Calgary is justifiable. It is not.
Garth, who is also a best-selling author recently published his new book “Greater Fool,” which examines real estate and personal finances in today’s fragile global economic state.
In addition, his new blog is also now open for business, GreaterFool.ca.
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