Hear Garth in Nanaimo, Sat noon, Conf Ctr.

On the ride to BC Thursday morning the thirtysomethings in the row behind me could not stop yammering about real estate.

‘Our house sold in, like, four hours,’ the woman said, ‘so then we started looking around and it was, like, total bidding wars. We spent way beyond our price point, but, I mean, whaddya gonna do?’ She was talking about dumping an inner-city micro-townhouse in Toronto, where last month sales surged 90% ahead of year-ago levels and prices have climbed about a quarter since we were all talking neo-Depression in the winter of ’09.

So, how do people find the money to trade up in a market gone mad?

By borrowing, of course. Generational borrowing. Let’s call it the 35 syndrome.

Hard numbers are tough to find, but swallow this:

• About half of all new mortgage originations are for people buying a house with 5% or less.

• About nine in ten new mortgages go to people with less than 10% down.

• About two-thirds of all newly-minted mortgages have amortizations of more than 25 years. Most of those are 35-years.

• And almost all of these borrowers are under 35 years old.

Does this matter? You betcha. It’s got the feds flummoxed right now trying to figure out how to save an entire generation from itself, and keep the economy from flaming out along with them. That’s why Ottawa is leaning towards diddling with mortgage income requirements rather than real estate downpayments. The thinking is that by forcing the banks to tighten up on lending requirements – so borrowers have to qualify now for interest rates that may occur in the future – it can prevent the kind of credit meltdown that screwed America.

But will it work?

Hard to say. After all the sub-35 crowd seems immune to debt. Maybe it’s the fact they graduated from university with a massive student loans. Or that living off the avails of Visa is an established fact of high school life now. Or simply that they went horny for real estate just when mortgage rates turned south, making it so easy to take on a debt reminiscent of Greece.

While Boomers feel tawdry when in hock, their kids measure the world in debt servicing costs, not debt principal. In other words, it’s not what you owe, it’s what it costs to carry it. Buying a $500,000 house with 5% down and a 35-year loan, after all, means a mortgage that not only will never be paid off, but monthly payments which are damn near all interest.

Where’s the escape in that scenario? Not from rapidly rising incomes, a boom economy or big gains on non-existent investment portfolios. Nope. Only one way out – a continued housing bubble. Then house equity jumps enough to make all that leverage work. You may be utterly tapped by monthly payments, but at least you’re making money – illusory as it may be until you actually sell and realize it. (And buy a bigger house.)

So, there’s the curse of the 35ers. To buy, they need debt – tons of it, cheap as dirt, payable to infinity. To survive this debt, they need a serious bubble. But the longer the bubble lasts, the more houses cost and the more debt required to trade up. It’s the curse of lifetime mortgages, each one successfully larger – the mirror opposite of the Boomers’ quest for debt freedom.

Obviously, can’t last.

If the bubble bursts and house values flatline or take a hit, the jig’s up. If central banks can’t hold the line any more and pop rates, disaster. If the feds rewrite rules ending this mortgage roulette and the market swoons, generational Armageddon.

You might ask what the under-35 set are thinking.  How could this not end badly?

But that would be the Boomer in you talking.

And who’s listening?