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The Biggest Housing Bubble in the World Is in ... Canada?
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pjp
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PostPosted: Sat Jan 26, 2013 4:24 am    Post subject: The Biggest Housing Bubble in the World Is in ... Canada? Reply with quote

Can the global economy handle another major event? Since they're still under the monarchy (lol), should Britain be required to bail them out?

The Biggest Housing Bubble in the World Is in ... Canada?
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PostPosted: Sat Jan 26, 2013 4:32 am    Post subject: Reply with quote

So this is what Canadians do when they aren't curling or dog sledding. They blow up housing bubbles.
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PostPosted: Sat Jan 26, 2013 4:37 am    Post subject: Reply with quote

lol
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erm67
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PostPosted: Sat Jan 26, 2013 7:40 am    Post subject: Reply with quote

Hopefully this is right:
Quote:
The good news is that, in all likelihood, our bubble won’t go KABOOM! Instead, we seem to be in for a painful but not devastating pop. That’s because only certain parts of Canada are in a bubble. Overcrowded markets in B.C. and Ontario may be close to busting, but many other areas of the country remain very affordable. The very same survey that ranked Vancouver most-unaffordable-city after Hong Kong rates Canada the third most affordable country, after the U.S. and Ireland.

Secondly, even in areas where there is a bubble, not all sectors of the market are equally inflated. Concerns about overvaluation and oversupply mostly regard the condo market, which has been the main engine driving the boom. Construction of single-family homes, on the other hand, “has already landed softly below its long-run average,” Merrill Lynch notes.

Most importantly, however, Canada’s pop won’t bring down the entire financial system, as it did in the U.S. That’s primarily because subprime mortgages are virtually non-existent in Canada, and government guarantees on mortgage insurance act as a buffer protecting the banking sector from housing market downturns. A whopping 75 per cent of mortgages in Canada are fully insured by Ottawa, according to the Financial Stability Board. Also, at the height of the crisis, the U.S. was grappling with severe unemployment, which kept fuelling the housing bust as more and more households became unable to afford mortgage payments. Though job creation is softening in Canada, there’s little reason to believe joblessness will rise to America’s level. Even economist Nouriel Roubini–famously dubbed Dr. Doom for accurately predicting the great recession–doesn’t think Canada is headed for disaster. He predicts a 10-per cent correction, but not a U.S. style meltdown.

Besides, Ottawa is keeping a close eye on the market. The government already cut the maximum length on federally insured mortgages from 35 to 30 years in early 2011, and Flaherty may have more of the same in mind–along with other cooling measures that aren’t tied to interest rates.

Most likely, then, the Canadian market will let the air out gradually. As inelegant as that sounds, it’s good news.


The price-rent ratio might be an indicator of a housing bubble but alone is not enough to predict one.
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PostPosted: Sat Jan 26, 2013 9:21 am    Post subject: Reply with quote

dmitchell wrote:
So this is what Canadians do when they aren't curling or dog sledding. They blow up housing bubbles.


No no, they go clubbing.
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PostPosted: Sat Jan 26, 2013 5:21 pm    Post subject: Reply with quote

erm67 wrote:
Hopefully this is right:
Quote:
The good news is that, in all likelihood, our bubble won’t go KABOOM! Instead, we seem to be in for a painful but not devastating pop. That’s because only certain parts of Canada are in a bubble. Overcrowded markets in B.C. and Ontario may be close to busting, but many other areas of the country remain very affordable. The very same survey that ranked Vancouver most-unaffordable-city after Hong Kong rates Canada the third most affordable country, after the U.S. and Ireland.
Hopefully. But I wonder if demand for living in Northwest Territories or Nunavut is going to increase. I think not. :)
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