Learn from the mistakes of others - you can never live long enough to make them all yourself. John Luther
RATHER THAN LEARNING from a neighbor's mistake, Canada appears to be making some of the same blunders the United States still tries to recover from. Overvalued housing and unsustainable consumer debt have some Canadians worried their country may soon have a recession of its own to deal with.
Similar practices caused the U.S. housing market and its broader economy to begin collapsing in 2006. It remains easy to see the consequences of such practices. Here in the United States, the price of a house nationwide is down more than 30 percent, foreclosure rates remain at the highest level since the Great Depression and one in four homeowners owe more on their home than it is now worth.
I speak with agents throughout the United State and Canada every day. We chat, talk about the weather, how business is going. My conversations are by no means a scientific survey, but it sounds pretty clear to me that business for Canadain agents has been going better, oftentimes much better, than for most of their U.S. counterparts.
So why, I wonder, aren't Canadians doing more to avoid making the same mistakes we made? Is there just nothing more that can be done? Isn't there some way to prevent what happened here from happening there?
Frankly, I don't have a clue and I suspect the average Canadian just trying to make a decent living doesn't have much of one either. But I have to believe there are people in Canada much smarter than most of us who are being paid much more money than most who are supposed to sort these things out.
Canadians need to demand that their officials pay attention to this issue in a big way. Someone needs to sort it all out before the market sorts it out for them.
Just how serious are the problems?
According to some, they are very serious.This past week a spokesman for Canada's second largest bank said the "significant imbalance" in Canada's housing and debt "poses a clear and present danger" to the country's economy. Craig Alexander of Toronto-Dominion Bank went on to warn in an article published in the Financial Post that job losses, declining house values and weak household consumption threatened by those imbalances could lead to Canada''s own recession.
Consider this for a moment: In June, 2011, the average price for a single family, detached home in Vancouver, B.C. was $901,680. Nearly a million dollars for the average house? Overvalued may be a fair description.
Throughout Canada, property values already are off their peak prices and concerns are growing over just how far they may fall. In Victoria, Edmonton and Calgary, the average home prices are off their peak by more than 10 percent. .
I hope the warnings being given in Canada are taken serious and hard decisions and tough action are taken to avoid at least some of the suffering experienced in the United States when things just turned into a freefall.
What's that other quote? Oh, yeah, now I remember: "Those who do not learn from history are doomed to repeat it." George Santayana