Canada Housing Market Essay

“The housing market will get worse before it gets better” –James Wilson. The collapse of the United States housing market in in 2008 was one of the most devastating moments for the world economy. The United Sates being arguably the most important and powerful nation in the world really brought everyone down with this event. Canada was very lucky, thanks to good planning and proper preventatives to avoid what happened to the United States. There were many precursor events that occurred that showed a distinct path that led to the collapse of the housing market. People were buying house way out of their range because of low interest rates, the banks seemingly easily giving out massive loans and banks betting against the housing market. There were

“The Economist earlier this year identified Canada as having the most overvalued housing market among three dozen advanced economies”. This is not the only source claiming that Canada’s housing market is over valued. “Deutsche Bank has also declared Canada to have the world’s most overvalued housing market, arguing that prices were 60-per-cent overvalued at that time”. Before the United States housing market collapse signs were being pointed towards this and implementations were attempted to be put into place. “As Canada’s government-run mortgage insurer, it’s CMHC’s job to keep Canadian housing and homeowners on an even keel. So it’s somewhat worrisome that this institution is now raising the alarm bells about overvaluation”. This is a clear and definitive sign that something is going wrong. The CMHC is attempting to put in last minute “fail safes” in order to avoid a housing market crash that will harm millions of Canadians. Yes Canada’s housing market crash will not be on the same scale of damage done to the worldwide economy, but it will surely affect Canadians. "The evidence of overvaluation has increased since the previous assessment in Toronto, Vancouver, Montreal, Edmonton, and Saskatoon as price levels are not fully supported by economic and demographic factors, ' ' CMHC economist Bob Dugan said in a statement. In the end when the CMHC is trying to

Not only is this a sign of an unstable economy and a poor handing out of loans overall, this is happening right now in Canada. “Canadian personal debt remains at record levels as well. The average Canadian household owes $1.64 for every dollar in disposable income. This is higher than the peak in the same ratio from the United States back before its housing market collapsed,” according to Fool.ca. Not only can this be attributed to Canadians themselves but foreign investors. “Foreign buyers–mainly Chinese nationals–were desperate to get capital out of China. Many of them bought Canadian real estate not as an investment, but as a store of value. With China’s main stock index plunging daily, much of this wealth is now disappearing. This combined with oil’s weakness now really being felt around the country could bode very poorly for Canadian real estate in 2016”. Every single day foreign buyers, mostly Chinese nationals are buying up space and homes in Canada at ridiculous prices to store value. This influx of wealthy Chinese people moving to Canada can be seen in schools all throughout the country. Small cracks in the structure have already been seen in Alberta where prices in Fort McMurray have fallen by more than 100,000$. The author of the article “Why 2016 could be the year Canada’s housing bubble bursts” says “ Put all these