Canadian Housing Bubble Will Burst
According to an article from Bloomberg, the Canadian housing bubble burst is imminent (https://www.bloomberg.com/view/articles/2017-06-21/canada-s-housing-bubble-will-burst). For several years, the Canadian housing market has been riding the bull, becoming increasingly-expensive as low supply-demand ratios and foreign investors drive the prices up. Analysts have been been speculating that the conditions are indicative of a bubble, and that a burst is long overdue. If this is true, this might send a ripple, if not a shockwave, across the Canadian economy, and perhaps the world.
Is there actually a bubble? Would it be like the US housing crisis? Can the Canadian government enact policies in time to prevent this?
Share your thoughts.
DISCLOSURE: I am not an expert in finance and economics. These opinions are not endorsed, and should not constitute, as official financial and economic advice.
Does any one see, all the west is in very bad shape?? There is clear perfection in commercial media, sure, but when you dig little deeper, you see more and more s*it coming up...
It's quite scary when you think about all the things that can go wrong. When you think that what if we are all just naive, going about our day-to-day tasks without knowing that we're driving straight to a cliff.
I really hope that's not the case. Even if that's the case, can we actually do something about it?
Why do you think we are in the mess that we are at right now?
Because of our banking fascist system, which is feeding only bigger corporations and lets smaller firms to die. Richer people get richer with private anonimous bank accounts, filled with silver and gold. And they invest in real estates mostly. Why are houses more and more expensive? When one banker sell a real estate to the other, the first one has to make a deal and make some money, while the other one has to have the buyer. And when that buyer will be ready to sell, the price will depend if the house was upgraded,or not and depends on the price on real estate market. So...if all the prices on the market are slightly higher, John will be selling this house for 10-15% more money as he had bought it. But bigger problem is for those who would like to buy a house for the first time. For those, a house has unacceptable price. And that price will fall very sharply. Why? Because now there is almost none of trades going on (buy/sell) in Canada and very small % the west .
Car sales are in extreme low , small shops are closing down every day, real unemployment in US is 26%, not 4%!
That's a very grim picture. What do you mean by the real unemployment in the US is 26%, not 4%? Why is there a difference between the real and reported values?
aint got time for this now. go and find why obama said that it will be "all right" with economy, despite, it was all rigged data and short lasting. it is all coming to surface...
Okay thanks for the pointer.
I am waiting for the housing bubble in Hong Kong to burst, so expensive for young people like me
I'm a millennial as well, and together with student debt, exorbitant housing prices prevent me from owning a house :( As much as I would like to see the housing prices go down, I am afraid of how it will affect the economy as a whole, specifically in terms of jobs and commodity prices.
How's the Hong Kong market right now?
Hong Kong is so small and crowded and still many people rushing to buy a flat. Tens of thousands Hong Kong Dollar per square feet.
People there must be earning millions per annum.
WOW that's very expensive! And here I am thinking Toronto has the most expensive housing market...
Is it like in the movie the big short?
I don't think it would be for the same causes. In the big short, it was due to excessive subprime lending, packaged and sold as financial instruments fraudulently rated way more than the quality of their underlying assets.
As far as I know, in Canada, regulations are more stringent, and the cause would be more about supply-demand imbalance in sought-after locations.
Correct me if I am wrong.
Investments will now lead to disappointment.
By that do you mean in the housing market, or the broader capital markets as a whole?
I mean the housing market. 🙃
Ah gotcha. Yeah it's unfortunate that some people are now paying mortgages that are more expensive than the corresponding houses they bought :(
if no china the world housing all will burst
Haha indeed. China is propping up a lot of international markets. I think there's a bloomberg article about how China buyers are having difficulties paying for some Malaysian property because of curbs on taking money out. Placing a big strain on the developers.
I kinda see what you mean, but wouldn't that also be like blowing more air into a balloon that's already nearing its full volume?
I think it's like spreading some of the air around. The property markets in some of the less developed markets in Asia have some way to go. It prolongs the bubble imo.
Yeah I guess as long as the bubble has room to expand, it wouldn't burst.
It's not a bubble when you know it's going to pop.
How tulips could be valued more than a house is beyond me lol.
The famous tulip bubble from 300 years back ?
Yup, the Dutch Tulip Bubble. I think it was the first documented bubble. Or maybe the South Sea one was earlier. That one even fooled Isaac Newton.
Haha one of the classic bubbles. Looks absolutely stupid looking back, but I'm pretty sure future generations will look at our bubbles and think the same.
I agree. Looking back, all bubbles look silly. But when you're in one, you feel foolish for not taking part.
Interesting how all bubbles end the same way - when no buyers show up.
I agree. That feeling of being left out when everyone's making vast riches.
I think that bubbles share common indicators , like the end bust you're referring to. The last ones holding the hot potatoes, in your case, the tulips, are always the ones who have to pay for everyone's speculative greed.
Let's just hope the pop's not a devastating supernova. I have a terrible feeling we didn't really fix the previous problem: we just patched up a bubble that has now expanded larger.
Financial engineered markets are here to stay till crypto world takes over in next decade
By that do you mean investing in equities will no longer be profitable, and will be completely replaced by trading cryptocurrencies, or do you think it will be replaces by blockchain-based trading platforms?
We need more decentralization. This is crooked world of world bankers that we are leaving in. Will be interesting to know how many of this bankers own bitcoins ;)
So then I assume that means you think that we'd still be trading equities in the future, but through blockchain technology instead of centralized systems.
How do you think this would prevent the unfair financial machinations you referred to? Wouldn't they just replicate it on the new system? Very curious.
Maybe someone can build a decentralized trading metwork where people can see what the biggies are doing instead of manipulating stuff in their own dark pools.
@hackerwhacker got you a 100.0% @minnowbooster upvote, nice!
Ah I see what you mean. With the blockchain technology, all transactions would be broadcasted to the entire network, so there would be nothing to hide, like in dark pools.
Low interest rates and cheap money have propped asset prices since the financial crisis. Take that IV drip away and we'll see whether the economy needs to go back on life support.
I see. I guess it's like giving drugs to an addict. It fixes their withdrawal symptoms, but causes further physiological damage.
Yes, i think it was needed initially to stop the panic. But it has gone on for 4 years too long. At least that's for the US.
Canada's a little different imo. You have hot money flowing in coupled with the oil slump. Tricky.
Good point.
The world economy is highly interconnected network, so I hope things will eventually go well for all of us.
meep
Fair enough. Just used the term they used in the article.
When you said you hate the word bubble, did you mean that the article is exaggerating the condition of the housing market?
I guess it is just too easy to use such word in so many occasion. I tell people about steem and alt coin, the first thing they said would be isn't it bubble? That doesn't really help to understand the issue underneath it. I just feel opportunity will be missed if we used a word like this.
But I agree housing price worldwide has reached to an unprecedented level.
Good point. I agree that people, from time to time, throw terms they don't fully understand. I've seen people claim to sell AI-driven apps, when in reality decisions are simply driven by conditional controls.
Definitely, I just don't like how nowadays will categorize everything as bubble and then when it bursts, they will say I told you so. But how many investment they have missed before that :)
Yeah I guess the key is to invest for the long haul, maximizing diversification while minimizing costs, ignoring all the noise from the markets. However, for speculators, it's always about timing the markets to find opportunities early and profit at the peak, which isn't exactly easy.
Honestly, I feel like if people buy houses, they shouldn't do so as a financial investment, but just as a desired possession that can be called home.
I hate the word bubble, it seems when you pick a chart, it goes up so fast and people will call it bubble. The housing price rises just basically happen to the rest of the world because US government is printing so much money that everyone just rush out and buy asset.
The key really is just to understand one's financial health and invest according to it.
Personally I don't think the Canadian government will be able to lessen the blow from the current real estate bubble they are facing. When the U.S. housing market crashed in 2007, Canada's housing market (which was already overvalued at that time) only had a slight hiccup and then keep climbing into bigger bubble territory. In my opinion, it's only a matter of time before this bubble pops.
That is very scary. Some of the people who recently bought houses in Toronto are now paying mortgages greater than the value of the homes they bought.
As an investor, what do you do to protect your wealth?