Canada's Housing Bubble

Analysis of the real estate bubble in Canada --

Vancouver now a buyers’ market, report finds Print E-mail

Jul. 04 2012 Tara Perkins

A sharp decline in home sales in the Greater Vancouver area has tilted the market in favour of buyers, the local real estate board said Wednesday.

Sales of houses and apartments fell 17.2 per cent from May to June, and were 27.6 per cent below the level they were at in June of last year, according to the Real Estate Board of Greater Vancouver.

Just 2,362 properties changed hands in June, the lowest level for that month since 2000.

Happy Canada Day Print E-mail


Flaherty says action to cool housing may dampen growth, but risk worth taking Print E-mail

Jul 01, 2012 Julian Beltrame The Canadian Press

OTTAWA - New mortgage rules to discourage homebuyers from borrowing too much could further dampen a fragile economy, but it's a risk worth taking, Finance Minister Jim Flaherty said Friday. Concerned about the continuing heat in the housing market, last week Flaherty intervened on mortgages for the fourth time in less than four years, cutting the maximum amortization period for government insured mortgages to 25 years from 30.

Cooling of housing market would be a good thing, Flaherty says Print E-mail

June 29, 2012

Canadian Finance Minister Jim Flaherty said the government is willing to accept the possibility of slower economic growth in exchange for cooling off the country’s housing market.

Flaherty, speaking on a conference call with reporters today, said he realizes the tougher mortgage rules he announced last week may have a “dampening effect” on the economy and the residential real eatate market.

Moody’s warns on mortgage debt Print E-mail


The federal government’s attempt to cool the housing market “may have come too late” to prevent a harsh landing for residential real estate, Moody’s Investors Service is warning.

After Finance Minister Jim Flaherty announced last week that Ottawa is tightening the rules on government-backed mortgages to keep the housing market from overheating, Moody’s said it is concerned the efforts may not be enough. High levels of household debt in Canada have left consumers with little flexibility to adapt to shifting markets, the credit rating agency said.

Deflating housing bubble risks recession Print E-mail

Jun 27, 2012 Andrew Jackson

Seen in isolation, Finance Minister Flaherty probably did the right thing in seeking to safely deflate the housing bubble and lower the dangerous growth of household credit to a record level as a share of household income.

But he did it very late in the game, and risks tipping an already very fragile economy into recession if he and the provincial governments do not ease up on fiscal austerity.

Ottawa tightens mortgage rules as authorities adjust to worsening world economic threat Print E-mail

Jun 25, 2012 Les Whittington

OTTAWA—Hemmed in by a deteriorating world economy, the federal government and the Bank of Canada are recalibrating their strategies in hopes of preserving growth in Canada without inciting a dangerous housing price bubble.

The looming damage from Europe’s banking crisis was front and centre Thursday as Finance Minister Jim Flaherty and Mark Carney, the central bank governor, went public in a joint campaign to head off runaway inflation in the overheated housing sector.

OSFI lays out finalized mortgage rules; brokers not so happy Print E-mail

Jun 24, 2012 John Greenwood

Canada’s banking regulator announced finalized guidelines for mortgage lending that along with other measures unveiled today by Finance Minister Jim Flaherty are aimed at cooling the country’s frothy housing market.

The Office of the Superintendent of Financial Institutions first proposed the guidelines back on March 19, as part of an international initiative spearheaded by the Financial Stability Board in Basel, Switzerland.

The housing market is teetering. Happy now? Print E-mail

June 23, 2012 PETE MCMARTIN Vancouver Sun

How long has it been since we last heard complaints about offshore Asian buyers driving up Metro Vancouver house prices?

Eons? Last month? Is there a difference when it comes to the short attention span of urban folklore?

Whatever the time, suddenly the shouting has stopped. From the enclaves of our tonier neighbourhoods, where angry residents were forced out of their homes after first cashing a cheque several hundreds of thousands of dollars above their asking price, nary a peep is heard. They’ve moved on. Probably to a spec-built neo-Craftsman mansion in the suburbs.

Housing: Will the bubble burst? Print E-mail

June 21, 2012

Housing is top of mind in Canada these days.-

So far, Canada has avoided the kind of catastrophic housing crash that precipitated the 2008 financial crisis. And, while it’s unlikely a popping of Canada’s housing bubble would resound worldwide, it would be a downer domestically.

In that light, Ottawa’s actions to decrease amortization periods for residential mortgages appear squarely aimed at cooling some of the runaway price appreciation in the country’s larger cities. By restricting lending, the government is essentially acting to take some air out of the bubble before it bursts.

One housing bubble down, one to go: Rosenberg Print E-mail

Jun 6, 2012 Pamela Heaven

Vancouver’s housing bubble has burst, but Toronto’s remains “as hot as the weather,” says Gluskin Sheff chief economist David Rosenberg.

In a note Wednesday entitled Tale of two cities, Rosenberg said Vancouver real estate has cooled significantly, and is now showing signs of turning into a buyers’ market.

Sales of existing homes in Vancouver sank 15.5% from a year ago May, with the sales for the month coming in the lowest for any May since 2001. At the same time the active inventory backlog surged 16.8% and new listings were up 14.4% from a year ago.

Canadian banks not immune to housing bubble: OSFI official Print E-mail

May 17, 2012 Andrew Mayeda

Canada’s banks, ranked the soundest on the planet by the World Economic Forum, aren’t immune to collapses triggered by falling housing prices, according to the government official implementing new mortgage rules.

Previous failures of Canadian financial institutions were due to bad real estate lending and sharp falls in housing prices, and these can happen again, Vlasios Melessanakis, manager of policy development at the Office of the Superintendent of Financial Institutions, wrote in documents obtained by Bloomberg News under freedom-of-information law. The last failure in Canada was in 1996.

Vancouver’s real estate swoon deepens Print E-mail


Mayur Arora is seeing something few would have expected in Vancouver’s real estate market – people walking away from deposits on houses, convinced prices will fall further.

“It happened twice in the last month. One [deposit] was $75,000 and one was a $20,000 deposit, the guys just walked away from it,” said Mr. Arora, who runs in Surrey, B.C. “They are going to wait it out. So they lost $75,000 and $20,000, but if the market comes down $150,000 on a $1.5-million house, that’s not uncommon.”

Canada Housing Bubble Talk Dismissed Print E-mail

May 09, 2012 Andrew Mayeda and Chris Fournier

The head of Canada’s biggest bank and one of the country’s leading developers said the housing market is not in a bubble, even as one economist said Toronto is caught in a “condo craze.”

Canadian housing starts rose to the highest since September 2007 last month, led by multiple-unit projects, Canada Mortgage & Housing Corp. said yesterday. The annual pace of home starts rose 14 percent to 244,900, Ottawa-based CMHC said.

Has OSFI got what it takes to oversee Canada’s housing agency? Print E-mail

May 07, 2012 John Greenwood

One view is that Canada avoided the financial crisis because of the strong oversight of the federal banking regulator, the Office of the Superintendent of Financial Institutions. When Wall Street firms were swapping around risky credit derivatives in the bubble years, OSFI warned the banks and insurers in this country to stay away, so when the music stopped in 2008, they had only limited exposure.

Now Ottawa wants to further buttress Canada’s financial system by putting the Canada Mortgage and Housing Corp., one of the largest financial institutions in the country, under OSFI’s rule.

Canadian Regulators Taking Closer Look At HELOCs Print E-mail

May 04, 2012 Caroline Van Hasselt

TORONTO (Dow Jones)--Amid the double-barrel threat of soaring household debt and rising home prices across Canada, regulators are taking aim at one of the most popular--and controversial--lending practices by the country's big banks.

Home equity lines of credit, or HELOCs, have soared in recent years, even after similar lending helped fuel the ill-fated U.S. housing market bubble. Canada's largest banks--which have generally won praise for conservative lending that protected them from the worst of the financial crisis--defend the loans.

Bank of Canada warns again interest rate hike may be needed Print E-mail

April 24, 2012 Reuters

OTTAWA — Bank of Canada Governor Mark Carney repeated on Tuesday that the central bank might have to increase interest rates and he continued to fret about the high levels of debt that Canadians are taking on.

Carney used an appearance at the House of Commons finance committee to stress the central bank’s recent message that rates could have to go up despite global economic uncertainty.

Jesse Kline: Government is to blame for Canada’s housing bubble Print E-mail

April 24, 2012 Jesse Kline

Canada’s housing market has been relatively stable over the past year, with the notable exception of Toronto, which has overtaken Vancouver as the country’s hottest real estate market. Prices in Canada’s largest city have risen 10.5% over the past year and there are now three times as many cranes dotting Hog Town’s skyline as there are in the Big Apple.

Mark Carney Concerned about some of Canada’s Condo Markets Print E-mail

April 22, 2012

Bank of Canada governor, Mark Carney, had a busy week this week. First he announced that the Bank would keep interest rates at their historic lows – for now; also saying that given improvements in the Canadian and global economies, the Bank will most likely start to raise them sooner than expected. Then on Thursday he was in Ottawa talking about HELOCs, warning of the dangers Canadians are taking with them. On Saturday he was doing an interview with CBC Radio, talking about Canada’s condo market and the overvaluations happening in many of Canada’s hottest markets.

Carney urges caution over hot housing market Print E-mail

April 22, 2012

Parts of the Canadian housing market, especially condominiums in some major cities, have seen prices jump to levels that warrant caution, the head of the country’s central bank said in an interview broadcast on Saturday.

“There are issues, particularly in some parts of the country in the condo market, without question, where activity has been particularly strong, has reached back to levels of the late 1980s,” Bank of Canada Governor Mark Carney told CBC Radio when asked if Canada was experiencing a housing bubble.


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