Bubble trouble? Canada’s hot housing market raises concern

Economy more dependent on housing sector than most other nations

National Weekend Edition /
Mar.March 20, 2021 09:00 AM
 Canadian housing market could be headed to bubble territory (Getty)

Canadian housing market could be headed to bubble territory (Getty)

Canada’s sizzling housing market has again raised concern about a bubble in a country where mortgages make up one of the biggest consumer debt piles in the world.

Home sale prices ended 2020 at record highs and haven’t let up this year, according to Bloomberg. Year-over-year pricing is now up more than 30 percent in many markets across the country, according to the report.

Along with the rest of the world, Canada’s housing market slowed to a near-halt in the first months of the pandemic then came roaring back. But so did the home loan originations.

The Canadian financial system’s exposure to those loans is twice that of the U.S., with some economists warning its economy is too dependent on the housing sector.

“A much greater share of our economy is now devoted to residential construction as opposed to nonresidential structures, or just straight spending on machinery and equipment,” said Bank of Montreal economist Saul Gautieri. “That fundamentally is not healthy.”

Vancouver and Toronto are among the least affordable cities in the world. Price growth in smaller markets, too, means it’s becoming increasingly hard for lower- and middle-income Canadians to buy.

Lawmakers including Prime Minister Justin Trudeau have said they will consider new policies to help make homes more affordable.

[Bloomberg] — Dennis Lynch 


Related Articles

arrow_forward_ios
(Getty; Illustration by The Real Deal)
Agents: Life is good under 7%
Agents: Life is good under 7%
Developer Geoff Palmer with one of his properties (Getty, G.H. Palmer Associates)
Geoff Palmer’s lawsuit over tenant protections tossed by judge
Geoff Palmer’s lawsuit over tenant protections tossed by judge
Coach Realtors' Mary Alice Ruppert (Coach Realtors Associate, Getty)
Sellers relent: Long Island home price cuts at 3-year high
Sellers relent: Long Island home price cuts at 3-year high
(Getty; Illustration by Kevin Rebong for The Real Deal)
Investor home purchases plummet 30%
Investor home purchases plummet 30%
From left: Peter Hungerford, Shai Segev, and Michelle Haruvi (Getty, LinkedIn, Zillow)
She wanted a piece of the Haruvi empire. She got an eviction notice instead
She wanted a piece of the Haruvi empire. She got an eviction notice instead
Home sales plummet in October
Existing home sales sink for ninth straight month
Existing home sales sink for ninth straight month
Housing Market, Residential Real Estate, Home Builders
Housing starts continue to fall amid mortgage rate peak
Housing starts continue to fall amid mortgage rate peak
Homeward CEO Tim Heyl (Homeward, Illustration by The Real Deal with Getty)
Power buyer Homeward cuts another 25% of staff
Power buyer Homeward cuts another 25% of staff
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...