A couple of months ago you (RF) were writing about the need for new housing models besides long-term ownership and lease/rental. I’d guess that the current turmoil presents an opportunity for smart developers to explore ways to fill their buildings.

An example, we’re going to New York for a long weekend in early November. The hotel we stayed in 3 years ago has tripled its rates. We found vacationrentalsbyowner.com, which has New York (and other) apartments for rent by the day or week. We were unsure about staying in someone’s home, but it turns out that people buy condos in order to rent them. This is unusual and maybe driven by the NYC hotel market, but still a change in the models.

First, with the largest price declines concentrated in relatively few regions, bank risk would have been largely contained. At worst, a bank would lose 15 cents on the dollar for mortgages at the top of the cycle instead of 35 cents on a mortgages with zero downpayments.

Second, without the huge expansion of subprime credit, price increases in the regions with the largest drops would have been more modest, and the consequent drops less damaging.

It is indeed unfortunate that we had to re-learn this lesson in this way.

To argue scientifically or intellectually that prices are unsustainable, you need to bring more to the table than simply the fact that houses are more expensive than they used to be.

Looking at the short term future indicators for Toronto area job growth and economic growth (based in part on the challenges in both the manufacturing and finance sectors) I see Toronto as more of a buyers’ market than Calgary or Vancouver over the next 2 years+.