Courtesy of Mish.
A recent parade of articles discusses the prospects of a pending Canadian housing bust. For example, The Globe and Mail reports Bank CEOs ‘should be worried’ about real estate.
Ed Clark, Toronto-Dominion Bank’s outspoken chief executive officer, is playing the contrarian card one more time, publicly arguing that he and his fellow bank CEOs should be cautious about the country’s heated real estate market.
While he isn’t worried about a full-blown bust, Mr. Clark believes chief executives simply can’t ignore warning signs in the market – particularly the sudden run up in prices for real estate of all stripes. “If you run a bank, you should be worried about it,” he told the audience at a bank conference in Toronto.
The only thing I am confused about is why Ed Clark isn’t concerned about a “full-blown bust”.
Pater Tenebrarum at the Acting Man blog notes Carney’s Legacy: Canada’s Credit and Housing Bubble.
Tenebrarum quickly asks “How Long Before it Bursts?”
Energizer Bunny
Over the course of the past five years, every time I thought a major Canadian housing correction was coming, none did.
Canadian housing has been like the “Energizer Bunny”, going and going and going. Nonetheless the housing bust calls keep on coming.
Short Notice
The Financial Times reports Canada housing: On short notice.
In the past five years, while other big developed economies have been suffering through the financial crisis, the average Canadian home price has risen 38 per cent to C$389,119 (US$355,000), according to data from the Canadian Real Estate Association. This has been driven in part by Toronto, where a condominium boom has driven prices to record highs.
At the same time, Canadian households have been on a debt binge fuelled by easy bank lending, low interest rates and government-insured mortgages. The household debt-to-income ratio rose to a record 163.7 per cent in the third quarter, close to the US peak of about 165 per cent on an adjusted basis.
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