Back in 2011 I published an article titled: Is There A Housing Bubble looming In Canada?. In that article is an interview with Max Kieser and Nicole Foss. Nicole basically explains that when Canada’s housing bubble burst. It will make the American housing crash look like child’s play.
I hope that Nicole’s numbers are off. But the premise that the Canadian housing bubble is coming, has come to fruition.
“A housing correction—or, possibly, a crash—is no longer coming. It’s here. And you don’t have to own a tiny $500,000 condo in downtown Toronto or a $1.3-million bungalow in Vancouver to get hurt. With few exceptions, the impact will be indiscriminate as the euphoria of rising house prices is replaced by fear. The only question now is how bad things will get. If the decline picks up speed, as many believe it will, there could be a nasty snowball effect. Construction jobs will be lost. Homeowners will end up underwater. Consumers may stop spending. “I’m getting very nervous,” says David Madani, an economist at Capital Economics, who has been predicting a drop in housing prices of up to 25 per cent in Canada. “I know I’m a bear, but the housing market itself has the potential to put us in a recession, let alone what’s happening in Europe and the U.S.”
Canada could be setting itself up for a devastating one-two punch: a painful domestic housing slump just as Canada’s export and resource-driven economy is hit with falling global demand. The most acute threat is the U.S. debt crisis, which, if handled poorly, could tip the world’s largest economy back into recession, taking Canada along with it. Meanwhile, Europe remains mired in a recession and concerns about China’s growth persist. “I feel like Canada is in the path of a perfect storm here,” Madani says. Other than housing, “the key pillar of strength is our booming resource sector,” says Madani. “If you take that away, it’s just going to knock the lights out.”
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In the news at the same time is this headline. thechronicleherald.ca: Canada’s trade deficit on rise
“The global slowdown hit Canada’s export-oriented economy hard, driving the country’s trade deficit to $1.96 billion in November, the third worst result in history in nominal terms.
The size of the deficit was far bigger than the $600 million forecast by analysts and well above an upwardly revised $552 million shortfall in October.
The picture was even drabber in the United States, which saw it’s trade deficit expand by 15.8 per cent to $48.7 billion in during the month.
Economists said Canada’s trade imbalance all but confirms the economy had another weak quarter in the last three months of 2012, with some saying it could approach one per cent, about half the natural level.”
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And if those two stories do not give you confidence in our economy, this surely will!
huffingtonpost.ca: First Nations Resources: Chiefs Vow To Block Projects If Ottawa Doesn’t Play Fair
“They can — and they will.
If the chiefs and protesters making noise across Canada have a common message for Prime Minister Stephen Harper, it’s that they intend to stand in the way of his resource development ambitions if he doesn’t play fair.
“We’ve got the geography covered,” Manitoba Grand Chief Derek Nepinak told a news conference Thursday. With First Nations and their supporters mobilizing across the country, they have the power to “bring the Canadian economy to its knees.”
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Add in the fact that Canada has the highest personal debt average in the world (153%), and 2013 looks like it will be one heck of a roller coaster ride! I highly suggest that you begin preparing (plan for the worst and hope for the best).
Sounds good to me. I’m one of the many who’s too poor to own a home in the first place. Let those owners feel some hard times…
Then again, rent is higher than it should be already. If owners have sudden financial difficulty, they’re going to take it out on the renters they leech off of.