Agree, but could be time-lag if sold 1-2 years ago and bought something cheaper now – ie no mortgage at all.

Someone had to buy the $1M home and I’m betting it wasn’t paid for in cash.

If you condo investors think you’re rental income is going to increase or stay the same during a recession you have no idea what a recession does.

that works for whomever is selling the detached and downsizing … but for every sale there must be a buyer. so what happens to the buyer of the single family detached? it’s not possible for the whole country to do this (unless we have a LARGE uptick in foreign ownership)

this is a story of decreasing credit in the economy. less credit equals less spending which means less income for someone … it’s called deleveraging.

I am no guru but I see it this way: if credit growth is slowing, there will be less money in the economy. If there is less money available, how can asset prices continue to rise if tomorrow’s buyer cannot raise as much money as yesterday’s buyer?

Regardless, on the second chart in the article there appears to be sharp decreases in debt growth before 1982, 1991, and 2008, but I have no technical answer.

Charles, because major changes like this usually take a couple of years before they have full impact. People and even business think it’s a temporary thing so they try to wait it out until either they become insolvent or loose hope.
That’s the main reason why we don’t see a massive number of listings in GTA. People still hope market will rebound shortly so they can sell at least at Apr 2017 prices.

Because everyone is doing great until they aren’t. By definition times are good until the recession starts.

I guess to answer the question, people who are “doing well” may think they “own” things that they do not own (such as a heavily mortgaged property). If these assets are further used as collateral to fuel spending, the balloon continues to inflate. Everything looks fine and dandy on the outside as long as the market continues upwards, but eventually spending (the economy) will slow as stagnant incomes can no longer keep up with rising debt service payments (fueled by rising interest rates).

Anecdotes: tradespeople are now available for appointments the next day, homes in my hood are still for sale after more than six weeks, my autofix place has started aggressive maintenance upselling, Kijiji has nothing good on offer since the end of summer.