CONTACT

Canadian real estate bubble talk continues and not everyone agrees

According to the Canadian Centre for Policy Alternatives (CCPA), Canada is experiencing a housing bubble that is destined to pop. In a recently released report, the non-profit research group examines house price growth in six Canadian markets and puts forward a few scenarios of how prices might be affected when the bubble bursts.


Canadians are becoming increasingly concerned that, like our neighbours to the south, there may be a housing bubble in Canada.


While the prospect of a bubble has been downplayed by the Bank of Canada, a number of economists have warned that Canada’s housing market is overvalued, which is bankers’ conservative way of suggesting a housing bubble may be afoot.


The CIBC warns a housing correction is in the cards, which is a milder alternative to a full- blown bubble bursting — though there are signs of trouble on the horizon.  For instance, the OECD finds Canada has the highest consumer debt to financial asset ratio among 10 OECD countries, including the U.S.  The Canadian Association of Accredited Mortgage Professionals estimate about 375,000 mortgage holders in Canada are already challenged by their current payments and may not be able to handle higher rates.


Read the CPPA report titled, Canada’s Housing Bubble – An Accident Waiting to Happen here.


Hot on the heels of CPPA’s report, the C.D. Howe Institute releases its own analysis of Canadian housing market and concludes that there is “little likelihood” of a US style housing crash occurring in Canada.


To evaluate the likelihood of a US-style housing market crash in Canada, one first needs to understand what caused the US housing boom and bust. As argued elsewhere, the Canada-US comparison suggests that a decline in underwriting standards played an essential role in the US housing market boom and dramatic bust. While monetary policy was very similar in both countries from 2000 to 2008, housing markets (especially the subprime component) were structured and regulated somewhat differently in each. Unlike in the US, the Canadian subprime market never expanded significantly into newer products, such as interest-only or negative-amortization mortgages, whose popularity grew rapidly in the US from 2003 to 2006. Moreover, while subprime lending increased rapidly in both countries over 2000 to 2006, the Canadian subprime market remains much smaller than that in the US, as subprime lenders accounted for roughly 5 percent of mortgage originations in 2006 – compared to 22 percent in the US (Mortgage Architects 2007).


Mortgage delinquencies support the key role of underwriting standards in what transpired. While mortgage delinquencies began to climb before the recession in the US, they only began to rise in Canada after the economic slowdown began. Moreover, the decline in Canadian house prices between August 2008 and April 2009 did not result in a large increase in mortgage delinquencies.


Read the C.D. Howe Institute's report, Not Here? Housing Market Policy and the Risk of a Housing Bust here.


I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.


Norm Fisher
Royal LePage Vidorra

Norm Fisher, Author of the TeamFisher Saskatoon Real Estate Blog

About Norm

Licensed in 1993, Norm brings a wealth of experience to TeamFisher. He has worked in every imaginable capacity including sales agent, office manager, team leader, broker and now, broker/owner. Norm has written a weekly review of the Saskatoon real estate market for more than 650 consecutive weeks which may make him the most consistent industry blogger in the world.Less...

Licensed in 1993, Norm brings a wealth of experience to TeamFisher. He has worked in every imaginable capacity including sales agent, office manager, team leader, broker and now, broker/owner. Norm has written a weekly review of the Saskatoon real estate market for more than 650 consecutive weeks which may make him the most consistent industry blogger in the world.

Norm is known for his passion for technology and can most often be found exploring and experimenting with the next big thing in real estate marketing. He was the first Saskatoon real estate agent to promote a home online and has been an early adopter of new technologies ever since. “Everything about this business has changed over the past 20 years, and it will happen again in the next ten. An open mind and a curious attitude are all that’s needed to continue to find new ways to serve our clients by delivering a faster, smoother, worry-free transaction,” says Norm.

In his spare time, Norm enjoys Crossfit and cycling, some years accumulating over 2,000 kilometres on the road. He’s a strong supporter of the Royal LePage Shelter Foundation and enjoys raising funds by joining fun, fitness-related initiatives like the Grouse Grind for Shelter. In 2015, he trekked the Peruvian Andes to Machu Picchu. In 2017 he walked the southern highlands of Iceland across mountains, sand, snow, ice, lava fields and forest for seven days. Collectively those initiatives raised over a million dollars for Canadian women's shelters.
 

Note: We are in the process of bringing this blog home to the TeamFisher.com domain and we have a lot of stuff to move! Another 700 posts can be found at normfisher.com where they'll remain until we can get them moved here.

The Saskatoon Region Association of REALTORS® (SRAR) IDX Reciprocity listings are displayed in accordance with SRAR's MLS® Data Access Agreement and are copyright of the Saskatoon Region Association of REALTORS®.
The above information is from sources deemed reliable but should not be relied upon without independent verification. The information presented here is for general interest only, no guarantees apply.
Trademarks are owned and controlled by the Canadian Real Estate Association (CREA). Used under license.
MLS® System data of the Saskatoon Region Association of REALTORS® displayed on this site is refreshed every 2 hours.
Google Analytics Alternative