The cover story in the current issue of Canadian Business: our housing bubble.
Resale prices are falling. Yet all this fits neatly with a prevailing opinion among realtors, economists and federal officials: that a combination of new harmonized sales taxes in Ontario and B.C., stricter lending standards and looming interest rate increases “front-loaded” sales into the first half of this year. Activity and resale prices will drift gently downward for the remainder of this year and the next, but Canadians will be too busy enjoying their sound banking system to notice.
This sanguine consensus overlooks how the federal government stoked the housing market over an extended period, particularly during the recession. The result is that sales have been front-loaded for far longer than many suppose. Canadians should brace themselves accordingly for a more jarring correction in residential real estate.
hat tip to Jonathon for the link!