Tag Archives: Canadian housing bubble

Canadian households are heavily leveraged and with their level of debt in proportion to income now hovering at record levels, they are vulnerable to a range of economic shocks that could create a financial crisis. I am of the opinion, however, that the range of variables at play discussed in this article would mitigate any possibility of a meltdown of Canada's financial system. Let me explain.

The Bank of Canada took a good look at the Canadian economy, saw it was sinking into the mire, glanced at the collapsed prices of commodities, particularly oil, saw how they were wreaking havoc in Canada, and then looked at the global economy, particularly at China and the US, and freaked out with the realization (acknowledgement) that things are heading south FAST.

Canada's real estate market has started to look eerily similar to the conditions that were present before the United States' real estate crash...This article reviews the data to compare the Canadian real estate values to the U.S. real estate market, to suggest why the Canadian real estate market is due for a significant correction.

Canadians are using their appreciating homes as ATMs (as Americans did in the early 2000′s before their housing crash) and the funds being borrowed are not just for home improvements, but in many cases to fund living and lifestyle expenses.

The Canadian housing bubble will never blow up. There’s simply too much “plankton” in the water. It keeps the “food chain” healthy and offers ample nourishment for the “big wales and sharks” and shorting the Canadian housing bubble is useless. Here's why.

Canada’s housing bubble has been a sight to behold. Home prices only dipped 8% when the US housing market crashed. Then it re-soared. Now, across the country, home prices are 26% higher than they were at the already crazy peak in 2008. In Toronto, they’re 42% higher! There is a major drawback Canada's housing bubble beyond the fact that it will eventually crash with terrible consequences.

The Canadian housing market is deep into bubble territory. We all know that bubbles can go on for longer than most people think but with the crash in oil prices and people fully believing their own hype, the market is set up for a big fall from grace. Canadian households are deep into debt and make American households look like penny pinchers. Here are five charts showing that the implosion in Canada’s housing market is inevitable.

Over the last 14 years, house prices in Canada have increased by 150%, twice as fast as in the U.S...[and] far outpacing household incomes. Any increase in interest rates would prick the bubble, and its implosion would trigger all sorts of mayhem to the point that the Canadian government has expressed concerned that such an event would be a significant risk to the "stability of the financial system".

The Canadian housing market is headed for a significant bust, in my view. It's going to be a repeat of the 2008 mortgage bubble deflation. Only it's happening to the north. People will lose a lot of money but those who understand and are properly positioned may gain fortunes.

Given the global economic backdrop, and in particular the sharp correction in energy prices to which Canada is highly exposed, the risks of a Canadian housing correction are rising. Home prices, which corrected about 10% during the recession, have surged again, making household balance sheets look increasingly fragile. Economists are becoming concerned. [Should Canadians be worried too? Let's review the situation.] Words: 280