Canada's Housing Bubble

Feb 17, 2012 Andrew Mayeda business.financialpost.com

Canadian lenders are loosening standards, offering mortgages similar to U.S. subprime loans that pose an “emerging risk” to financial institutions, according to the banking regulator.

Banks and other lenders are becoming “increasingly liberal” with mortgages and home-equity credit lines that don’t require individuals to prove their income, according to 152 pages of documents obtained by Bloomberg News under freedom of information law from the Office of the Superintendent of Financial Institutions. The mortgages, typically granted to the self-employed and recent immigrants, “have some similarities to non-prime loans in the U.S. retail lending market,” the documents show.

Dim lights

Feb 14, 2012 David Stevenson moneyweek.com

Canada is one of the few Western economies to have rebounded strongly from the Great Recession.

Indeed, in some ways it’s as if it never happened. Annual output has surged above the previous peak in 2008. The trade surplus in December rose to a three-year high. And all the jobs that were lost during the downturn have been recovered.

Feb 13, 2012 Doug Alexander bloomberg.com

A sliver of land wedged between Toronto’s elevated expressway and an off-ramp that pumps traffic into downtown may become the epicenter for a Canadian housing bubble.

In four years, this site that’s now used as a parking lot and police impound near the shores of Lake Ontario will be home to Ten York, a 75-story glass building that would be the country’s third-tallest condo tower.

Feb 10, 2012 Erica Alini macleans.ca

A few days ago, Bank of Canada governor Mark Carney released another alarming, albeit muted, warning shot about the state of the Canadian real estate market. Some properties in Canada are “probably overvalued,” the central banker said during an interview with CTV. Last week Finance Minister Jim Flaherty hinted he is also worried about housing: “We watch the housing market carefully and we are prepared to intervene if necessary,” he said.

Feb 09, 2012 David Parkinson theglobeandmail.com

Rock-bottom mortgage rates have been the fuel behind Canada’s house-price boom. Now, they may also be the shield keeping that boom from becoming a bubble.

Bank of Montreal chief economist Sherry Cooper argues that despite the Bank of Canada’s repeated warnings about the alarming deterioration in the country’s household debt levels, driven in no small way by a seemingly unstoppable upward march of home prices, the residential real estate market is not teetering on the edge of a U.S.-style meltdown.

Feb 07, 2012 Robert Morley theTrumpet.com

You have to empathize with people in Canada who want to buy a house. In boom cities like Regina, Saskatoon, Vancouver, Calgary and Toronto house prices have inflated virtually non-stop for more than a decade.

Income growth though—what income growth?

Consequently, it is virtually impossible for the typical person to purchase a home without bankrupting himself in the process. For many families, even with two incomes, buying a house is stretching beyond the breaking point.

Feb 06, 2012 economist.com

IN FEW corners of the world would a car park squeezed between two arms of an elevated highway be seen as prime real estate. In Toronto, however, a 75-storey condominium is planned for such an awkward site, near the waterfront. The car park next door will become a pair of 70-storey towers too. In total, 173 sky-scrapers are being built in Toronto, the most in North America. New York is second with 96.

Feb 02, 2012 Derek Abma business.financialpost.com

OTTAWA — Never mind Europe or the United States, Canada’s got a number of its own economic problems, according a panel of experts who gathered Thursday in Ottawa.

An inflated housing market, an under-utilization of the country’s human resources and growing gaps between rich and poor were just a few of the issues brought up in a discussion that took place on Parliament Hill, organized by the Canadian Centre for Policy Alternatives.

Jan 31, 2012 Daniel Tencer The Huffington Post Canada

Canada’s financial regulator is growing worried that Canadian banks are following their American counterparts into the “subprime” mortgage market that blew up the financial system in 2008.

Jan 27, 2012 canadianbusiness.com

What it means to you: Rising prices, stagnant wages and mounting debt loads could send the housing market into a tailspin.

Is this the year the housing market finally crashes? So far, it sure doesn’t look like it. Sales activity over the past 12 months has been strong, and prices have continued their unstoppable march upward—despite a tepid domestic economy and turmoil around the world. The average price for Canadian homes sold in November stood at $360,396, according to the Canadian Real Estate Association. Meaning that in just 10 years, prices have doubled.

Jan 26, 2012 macleans.ca

Some properties in Canada are “probably overvalued,” according to Bank of Canada Governor Mark Carney. The country’s chief central banker made the statement in an interview with CTV’s Question Period, which was broadcast on Sunday, adding his voice to worries that a housing bubble could be forming in the country. “There are risks out there. We’re watching it closely,” he said, quoted by the Reuters news agency. Carney added that the central bank is working with financial institutions and the federal government to keep the situation under control. Ottawa has already ramped up mortgage regulations. On Jan. 17, Finance Minister Jim Flaherty said the federal government is ready to step in and intervene in the housing market if necessary.

Jan 23, 2012 Ted Rechtshaffen theglobeandmail.com

A few months ago I heard leading Canadian investor Eric Sprott speak, and he said a very basic thing that struck a chord. He said that you should not be afraid to connect the dots. The dots are usually in front of you, but people don’t often look beyond the single dot.

Today I am going to show six dots that we can all see. When we connect them, the conclusion is that the Canadian Mortgage and Housing Corp. (CMHC) has a realistic chance of putting the Canadian taxpayer at risk – unless meaningful changes are made.

Jan 23, 2012 BARRIE McKENNA theglobeandmail.com

In the newspaper business, it’s called coincidental placement – the juxtaposition of two unrelated items in a way that tells a powerful story of its own.

Take last Wednesday’s Globe and Mail. Finance Minister Jim Flaherty and Bank of Canada Governor Mark Carney are all over the Report on Business section, fretting that a mortgage price war is duping Canadians into buying homes they can’t afford.

Dim lights

Jan 17, 2012 Doug Alexander and Sean B. Pasternak bloomberg.com

Kevin Lau, a Toronto-based technology consultant, says he can’t wait to take advantage of the lowest mortgage rates in Canadian history to buy a second condominium and rent his current home.

Lau, 28, plans to get another mortgage and refinance his C$160,000 ($157,000) home loan after Bank of Montreal, Toronto- Dominion Bank and Royal Bank of Canada (RY) cut borrowing costs last week.

Jan 12, 2012 cbc.ca/news

Toronto, Vancouver markets singled out

The robust Canadian housing sector, especially the booming condo markets in Vancouver and Toronto, could be at risk in 2012, say the heads of some of Canada's biggest banks.

Gordon Nixon, president and CEO at Royal Bank told a banking conference Tuesday the Canadian housing market could be headed for a slowdown, led by Vancouver and Toronto.

Jan 09, 2012 Michael Babad Globe and Mail

Whither the real estate market?

Canada’s housing market is headed for a cooling-off period, which is no surprise, given the uncertain economic climate, a rising unemployment rate and recent changes to mortgage rules. The question is the path, and how steep that downturn will be.