Bubble trouble: The Economist says Canada has its very own housing bubble
The Economist set off a mini media firestorm in the Great White North this week by lumping Canada in among nine countries where “home prices are overvalued by about 25 per cent or more” (the Toronto condo boom apparently isn’t helping). Canada is also part of an even more prestigious club, standing with only three other countries where “housing looks more overvalued than it was in America at the peak of its bubble.” Yipes. Not everyone is nervous though. The Star quotes Ben Myers of Urbanation, who argues that the magazine’s methodology is “flawed” and simplistic. Meanwhile, the Huffington Post Canada links to a story that claims the country’s housing market not only is strong and resilient but also has “rippling muscles.” Read the entire story [The Economist] »
(Images: Toronto skyline—Seekdes (Mike in TO); bubble—Rhett Maxwell)
10 thoughts on “Bubble trouble: The Economist says Canada has its very own housing bubble”
When it crashes, it’s going to be such a good story…
it wont be a crash, it will be a step back. A reset button rather than a catastrophe.
Talk is cheap. They have been saying this for years yet prices have been climbing YOY.
They have said bubble for Canada for many years, yes. As RE plunged in 2008-2009, the Feds stepped in remember? They dropped rates to stabilize the housing market. Well, well, they created a second wave of idiot buyers and with those buyers, flippers and speckers hop on the train. Now, there are no more tweaks left. Sure if they want, drop interest rate back to .25%. But they won’t as it means there is fear.They never want us to know the real truth.
shits about to crash and burn
Housing: After the Bubble Bursts
“Many Canadians believe that when this housing bubble bursts, they will have a soft landing, unlike the American’s. They say that the outcome for Canada will not end in a disaster like it did for the U.S. economy, because Canada did not have AAA rated CDOs (Collateralized Debt Obligations), NINJA loans, etc.
True, Canada did not have these, but neither did Spain, Ireland or Japan. Nevertheless, Spain and Ireland are now worse off than the U.S. Here is a comparison:”
Canads housing bubble is so huge that only an idiot would buy into realtors lies. With a gult of condo’s/housing in the GTA 2012 will see a drop of 15-25%. Realtors are other vested interests have much to worry about. I’ve read that many condo buyers are trying to get out of their condo deals as condo sit emptry with no renters or buyer. 2012 will be a brutal housing crash in Canada.
What bubble burst has resulted in a soft landing? It is not any different in Canada than anywhere else. The market has been straight up for 16 years. Thousands have signed condo contracts for delivery dates going out to 2014. The supply will keep increasing as demand falls and interest rates creep upwards. CMHC will also be tightening terms. The current market is out of control. The clouds are brewing for the perfect RE storm. Rentals will be cheap and plentiful as purchasers take ownership of those multiple units that they lined up to buy 2-4 years ago.
I would be more worried about the massive personal debt problem. I think the last figure published was close to 1.6 Trillion dollars for Canada alone. The combination of rapidly decreasing home prices along with increasing interest rates amounts to a Tsunami. Mr. Greenspan and friends are probably giggling over a scotch at how they muppetized the world. The devils are going out with a bang. Ron Paul for Prime Minister.
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