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Canadian Housing — In a Bubble?

by | Jul 25, 2012

I read an interesting article today that certainly needs to be shared with all my readers!  If we think as Canadians that we are not about to burst our housing bubble, then I do believe we have another thing coming.  David Madani, an economist with Capital Economics, confirms this as well in today’s article in the Financial Post.

“There is always a stand-off period at the end of a housing bubble, when prospective buyers refuse to meet the price of sellers, who refuse to drop the asking price,” he said in a note. “Eventually it begins to dawn on sellers that the market has shifted and, as they become more desperate, they eventually agree to lower their asking price. But until that happens, any stagnation in prices can be misinterpreted as a successful soft landing.”
Mr. Madani said that he expects housing prices in Canada to crash 25% over the next couple of years. He originally made that forecast in June of 2011 and reaffirmed it Wednesday.

Mr. Madani’s update follows a report from the Royal Bank of Canada, the country’s largest mortgage lender, that said that Toronto’s red hot real estate market is not a bubble.
In that report, RBC’s senior economist Robert Hogue said that demand in Toronto is in line with supply, dismissing claims that a condo bubble has emerged in the city.
You can read the entire post for yourself here.
What do you think? Is our Canadian bubble about to burst? Or do you think we will we be safe from that experience.

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