Concrete Analysis | Canada residential real estate looks risky, but it’s not everywhere
The residential sector is all fired up, but is it staring at a bubble and will it pop?
There has been much debate about whether the Canadian housing market is in a bubble, and if so when and where it may pop. Pundits on both sides of the debate are sparing no effort in putting forward their cases.
Even some Americans – investment analysts, investors, economists etc – have joined the fray. They mostly argue for a pop and recommend shorting the Canadian dollar.
The Yes camp generally cites the increasing Canadian household debt-to-income ratio, which seems to be a result of increased mortgage debts due to rising home prices.
In particular, some Americans are convinced that Canadians are again being too enthusiastic about real estate and borrowing too much to get a piece of it.
Indeed, the loose money policies embraced by central bankers worldwide are providing much of the needed fuel firing up the property market.
The No camp argues that Canadian banks are holding down the mortgage approval line well. That means subprime lending is almost non-existent and so avoiding the pop which befell the US before.
