Is Canada's housing market primed for a bust? As I read it is hard to not catch a close neighbor's cold!
Canada had a better set up than us to begin with. They have stricter lending policies in place and other things designed to avoid a situation like we've seen here in the United States. There have been signs of easier lending though which may the downfall. It does seem inevitable that they will see some of what we have been experiencing.
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But the Canadian housing market is showing signs of strain. Driven by an overhang of supply and by recent government efforts to tighten lending standards, housing starts in October were down 9.2% compared with September, and down more than 12% in urban areas. Also, housing prices have begun to level off after a decade of scaling ever-greater heights. Over the last ten years, housing prices have increased more than 95% nationwide.
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They say that lower housing prices could really effect Canada and the economy. They probably won't be hit as hard as we have but there are signs that they may be in trouble as well.
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One red flag doesn't make a trend. But it should prick up the ears of investors still hoping for fortune in Klondike country. As the long-time Canada bull James Grant noted in July, "the track of Vancouver housing prices matters far beyond the province of British Columbia," adding that, perhaps, the best place for investors to park their money was in "a country in which a housing bubble has already popped, rather than one -- Canada, for instance -- in which it is just beginning to deflate."
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11-15-2010, 07:52 PM
Is Canada's Housing Market Ready to Bust?
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