Most Canadians don’t seem overly concerned with our seemingly unstoppable, red-hot housing market. But our American neighbours are increasingly skeptical.
In an article on the investment news website The Street, Eric Jackson warned of some “eye-raising” facts: Canada’s real estate prices have gone up 40 per cent in the last year, while incomes have plummeted (a recent CIBC report says 17 per cent of homes are overvalued). We’ve racked up huge debt, and personal bankruptcies are at record levels: our debt-to-income ratio now ranks first among the OECD countries. It’s not hard to see why. In Vancouver, people spend 68 per cent of their disposable income on housing.
U.S. financial blogger Mike Shedlock argues stats like that suggest the market is set for a spectacular burst. “A Canadian housing crash is a given. Timing it is the only issue,” he writes. “Furthermore, the bigger the bubble the bigger the crash. Only fools believe it’s different in Canada.”