Why Canada’s housing market isn’t the same as what happened in the US in 2008/2009.

I’ve been asked if Canada is a) in a housing bubble and b) and if so, when will it burst, and c) if it is like what was depicted in the movie “The Big Short”.

Until now, I’ve been saying a) I have no idea, b) If I did, I’d be psychic c) Absolutely 100% not… though it was a good movie!

The US housing crash in 2008/2009 was largely caused by banks offering mortgages to anyone who came asking.  Some US banks allowed sophisticated investors (Who understood mortgages were poorly underwritten) to effectively “Bet against” their own mortgages – and when the bet became reality, the banks had to pay up, big time.  This made a few select people rich, but for the most part, it caused the financial collapse.

By contrast, here in Canada, you must to prove long term employment, have excellent credit, and a solid down payment in order to obtain a mortgage from a “Big 5” bank.  If not, you’ll need to get private financing for a mortgage, and that will cost you!

So you can see, what specifically happened in the US in 2008/2009 is not a risk for us here.  Having said that, I do think that excess foreign investment funds are propping up our Vancouver/Toronto housing markets, and until it stops, I believe our housing market to continue going up up up, and affordability going down down down.

A little more information was recently posted in the Huffington Post here… goo.gl/832GZA


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