Housing Correction

I just heard an advertisement on the radio that TD Canada Trust is giving 7% cash back on mortgages. And I was thinking... hmm... what's with the added incentive.

The first thing that came to mind was the domestic automotive fiasco where american car companies were giving out high incentive to buy domestic. Eventually it became a game of who had the best incentives. And as soon as the incentive was removed, buyers explored non-american options.

So why the mortgage incentive? I believe it's a sign of weak demand on mortgages, most likely due to prices being out of hand. At 50% of typical incomes, housing is at its highest point since the last market correction in 1990. I was only 9 years old at the time, so i was oblivious to what was going on. But at the ripe age of 26, I'm getting a better understanding of fundamental supply & demand economics.

I have to believe that 1 of 2 things must happen to avoid housing price correction. 1. we get paid more real dollars. 2. see number 1.