CAN U.S. REAL ESTATE MARKETS IMPACT TORONTO

The big press in Toronto is not about the U.S. real estate market, but rather about the U.S. mortgage market! The sub prime mortgage market in the U.S. has taken a hit - and why not when you lend to people with 'no money down', bad credit, or no proof of income!! I doubt if most common people would make many loans under those circumstances but apparently the professionals in the U.S. lent billions.
In Canada, the sub prime market is much smaller and thankfully Canadians are more conservative. What has hit our markets is that some of our so called prime short term loans ABCP (asset backed commercial paper) in Canada sponsored by banks and non-bank companies such as Coventree is bundled debt which includes car loans, credit card debt, and finally admitted too - a little sub prime mortgage money! Everyone now wants out. This lack of liquidity is causing everyone to get nervous. Central banks have poured billions into the market to stabilize the situation. Is this just a minor short term issue or the start of a market correction?
We know that a weak U.S. real estate market will not impact our real estate market directly. After all you can not ship properties for sale from Florida to Toronto!! But money is another commodity that knows no borders. A financial problem in the U.S. can impact our economy. And a recession in the U.S. can impact our economy, which would in turn impact our own real estate market.
What do you think? U.S. problems are just a minor correction and our real estate market will carry on? Or this is a major problem which will impact our real estate market in 2008?

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