What is fueling the Canadian housing market?

In case you were curious to know the real reason housing prices continue to rise in Canada it’s really quite simple. What’s causing housing prices to rise in Canada is the CMHC known as the Canada Mortgage and Housing Corporation which to a degree puts the Canadian tax payer on the hook in the event of economic collapse. The CMHC initially was created to help average Canadians find a home but like all other government supported programs that get into business CMHC is now being used as leverage to push for more profits.

In 2013 American politicians are wrestling with with Obama care and the reason this is happening is because typically once Government puts it’s hand in “something” the price of that “something” typically starts to rise. This happens primarily because smart investors and brokers can use government security of something as leverage to fuel the price of that good of service. In Canada being that investors can invest in CMHC protected mortgage backed securities homes in Canada and homeowners in Canada feel safer asking for more for their homes.

A lot of people don’t know why this is, some call it inflation and to a degree this is true but the real fuel behind the Canadian housing market is CMHC. Most of us especially people living in Vancouver are beginning to wonder when will this all come crashing down or when will this market start to cool off? Truth be told price increases might never cool down however it might cause a different effect one in which average Canadians can’t afford to purchase homes even with CMHC present.

What will happen then? An increase in Amortization? Something similar to what is happening in Japan? 100 year Amortizations? The word “Mortgage” is a derivative of the word “death pledge” and if you look at present mortgage prices I would say this is what most homeowners are signing when they move into their brand new $500,000, 1300 square foot townhouse condo!