Chincy shared this link to a post on the CMHC over at the America Canada blog. It’s one of the clearest looks at factors driving the Canadian housing market that I’ve seen in a long time and it’s well worth reading in it entirety. Here’s an excerpt:
CMHC indicates in its plan that it will insure $813 billion via a combination of mortgage insurance and mortgage-backed securities (MBS) by the end of 2009. Looking at 2008 and 2007, one can clearly see that CMHC has drastically exeeded their planned figures. 812 billion is more than likely a minimum target. At this rate the Government of Canada will be insuring over $1 trillion in mortgages and loans or 77% of GDP by the end of 2010. That is double what Fannie Mae and Freddie Mac insured on a per capita basis or the equivalent of the entire mortgage debt of the United States on a per capita basis.
Even at the zenith of the US housing bubble, prices peaked around $250,000 US while incomes were around $47,000 US. In Canada, incomes are $44,000 and prices are now at $342,000. If I have evidenced to you at this point how risky our lending has been, how are we so different than America? One might even say that we are much worse.
Read the whole post and see what you think about his conclusion. It’s a convincing argument that the CMHC has strayed far from their original mandate of making homes affordable for Canadians and engaged in activity that has the opposite effect, encouraging speculation and overlending and insuring it with your tax dollars.