Clearly rattled by comments he read here a couple of days ago (‘Carneynomics’). The country’s central banker is sorry. Honest.

In case you missed it, the Bank of Canada’s Mark Carney let it be known yesterday that people who have both hands, a foot and other dangly body parts in the mortgage cookie jar are now at risk. Debt kills, he intoned. “Households need to assess their ability to service these debt obligations over their entire maturity, taking into account likely changes in both income and interest rates.”

Translation: I’m going to jack rates, little people. And be ready for tax hikes, too. Consider yourself, like, so warned.

Of course this might have meant more if the guy had actually raised interest rates – even a little – this week when the BoC overnight was set. But as it is, the bank rate stays at a quarter of one per cent, the bank prime is a 2.25%, and that mortgage cookie jar is jammed with tasty little low-cal home loans. So I’d say all this yakking will do is push more people to borrow, knowing the end is nigh.

David Rosenberg knows it. The noted economist is newly returned from a high-profile gig on Wall Street, and we banged into each other at the corner of Bay & Wellington a few days ago to prove it. He’s now estimating the Canadian housing market is overvalued by 15-35% (say, where have we heard that before?) which is about as close to a bubble as you can get without feeling moist, pink and sticky.

So, can you imagine a period, say two years, of steadily rising mortgage rates, and a coincident reduction in real estate values, car sales, appliance deals and faucets so cool nobody can use them? What would happen if the Toronto and Ottawa and Vancouver average price dropped by Rosenberg’s minimum – 15%? Well, I showed you the impact two days ago of a 10% drop in the average Toronto house price to a buyer with a 5% down. Two words: negative equity.

Also recall that if a 5% downer in that situation decided to sell, a cheque for $58,000 would be needed to close the deal (that’s new money the homeowner has to kick in), and the loss would be over $105,000, or 24% of the value of the house. And let’s not forget that a jump of merely 1.25% in mortgage rates needs a hefty salary increase just to qualify to own the same home upon renewal. But rates won’t be 1.25% higher in four years. Maybe in 12 months.

Also consider a 20% drop in Toronto prices would reduce the average home by $90,000, while in Vancouver it would bring the average SFD down by $180,000. It sure would make those people lining up to buy condos at X2, The Mark or 111 Richmond look like they scarfed way too many empty calories.

Some people call me a real estate bear. They’re right. Others say I hate that asset. They’re wrong. I have the deeds to prove it. Every rational investor should have exposure to real estate, but only fools have all their net worth in a house recently bought at record levels with financing which will grow more costly.

The last thing this economy needs is a housing meltdown, which is exactly where we’re headed unless that damn jar lid snaps shut.

Only one man can do that.

Dude?