Warnings of a dangerous housing bubble in Canada are growing.
Amid growing concern over a dangerous housing bubble in Canada, respected economist David Rosenberg is warning that the numbers in Canada’s housing market are worse than what he saw in the US housing market before he warned of the bubble in that country:
“I’m taking a look at all the metrics I had in my hands when I called the housing bubble in 2005 and 2006 in the United States. I was looking at home price to rent ratios, I was looking at home price to income ratios, I was looking at the extent to which the household sector was overexposed to residential real estate on their balance sheet.
“I’ve got news for you: the numbers in Canada, on all the metrics, are higher now than they were at the peak of the U.S. housing bubble 13 years ago.”
With Canada seeing a massive expansion of the money supply combined with huge budget deficits, and restrictions on development which keep the housing supply artificially limited, government and central bank policy is putting Canada into a very dangerous position.
And the longer it goes on, the more politicians and central bankers feel trapped, with a large portion of Canada’s GDP dependent on the housing market – an incredibly dangerous position for a country to be in.
The fact is, interest rates can’t be suppressed forever, and Canada needs to realize that an economy dependent on an artificially manipulated housing market is an economy destined for a crisis.
Spencer Fernando
