Tuesday, April 28, 2015

Canada’s Magnificent Housing Bubble Goes Nuts, Cracks Even “Second-Time Buyers” need help from mom & dad

A housing bubble is a huge party. Everyone gets drunk and has a good time. The economy booms because housing, particularly construction, is a very local business. It creates local jobs. People spend this money. Businesses get this money. Governments exact their pound of flesh. But there is a drawback to a housing bubble, beyond the fact that it will eventually crash with terrible consequences: New entrants into the market are getting locked out by soaring prices.

Canada’s housing bubble has been a sight to behold. Home prices only dipped 8% when the US housing market crashed. Then it re-soared. Now, across the country, home prices are 26% higher than they were at the already crazy peak in 2008. In Toronto, they’re 42% higher! Prices in the major urban centers where young people like to live have become a challenge for first-time buyers.  (more)

Please share this article

1 comment:

  1. It was a huge party indeed. I think this May or early Autumn will be a great time to harvest real estate gains in Toronto and Vancouver. We can go a little higher after that, but not much and it's not worth it considering the size of this bubble and the risks that this entails.

    ReplyDelete