Merrill Lynch bearish on housing
Eric Shackleton
The Canadian Press
Merrill Lynch is challenging the
prevailing view that
In a report issued yesterday, Merrill
Lynch
They said it's only a matter of time
before the "tipping point'' is reached and the housing and credit markets
crack in
The Merrill Lynch
Prime Minister Stephen Harper, in
"I think our housing market is in a
strong position (and) consumer markets, as well, are stronger in Canada than
the U.S. and the position taken by our financial institutions.''
"Of course, we have seen that this
market has somewhat weakened in the last 12 months but we will not see such a
situation here as in the
The National Association of Realtors
reported yesterday that the
Many economists have said repeatedly that
Canada's housing and banking sector is much more stable than its American
counterparts and unlikely to crash -- since it didn't spike in recent years
because of many differences between the two countries.
Benjamin Tal, an economist with CIBC who
has been closely following the ups and downs of the housing industry, said
yesterday he sees no "trigger'' threatening Canada's housing and mortgage
market.
"To see a crash in the housing
market you need a trigger.
"The trigger in 1989-1990 was
extremely high interest rates.
"The trigger in the
However, Merrill Lynch -- whose
Household net borrowing in
Gregory Klump, chief economist with the
Canada Mortgage and Housing Corp., said there would need to be a spike in
interest rates or massive layoffs before the housing market would take a
tumble.
Right now, Klump said, "we have a
stable labour market'' and interest rates are low.
"There's no distress sales in
The Merrill report says housing prices
are now falling and inventories of unsold homes are rising sharply.
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