We won't get a housing 'correction' (crash), without distress selling. Not happening. Canadian banks are saying 'Don't pay back the principle'. But that's not enough, you need to dissolve a chuck of principle every month and put it into interest rates, so there's no default. That means you increase the 'payback' time every month. It's now approaching 100 years, and it will go over that. It's the rate of the payback time increase that is important here.
For Canadians that are under water (mortgage more than its worth), it is best not to pay anything, stay in the house, and watch the payback time zoom to infinity. Have another beer!
This is probably worse than the Japanese bank failure, where everybody had 'bad loans' they ignored. I'm surprised the government will allow going to infinity, but they don't want debt failures either. But, the recession is useless without this. Interest rates will have to go up as everybody buys new cars with their phantom money. Neat.
Right now, the true discount on housing is 50% (or more), but lots of people are putting houses on the market at either zero or 20% discount.
ps. whoops. As soon as the payback per month goes to zero, you are at infinity. To go beyond, they must be constantly increasing the principle, and they must throw some of that at the payback, in order to keep it from going over 100 years, which would look bad.
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