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Much has been written about the global and particularly the US housing markets being overvalued. Our homes are typically one of the single biggest purchases we ever make and represent much of our wealth and security.

Last year we reported that the Economist magazine estimates that Canadian real estate is overvalued by a staggering 23.9%. See https://tridelta.ca/The-Canadian-Financial-Planner/2011/06/is-canadian-residential-real-estate-overvalued/

Since then we have only seen more gains stack up each month. How long can the party go on? Not long according to a report from a US market watcher who commented about Canada in a recent article, see https://www.doctorhousingbubble.com/canada-housing-bubble-ripe-for-popping-vancouver-housing-bubble-2012-pop-real-estate-canada/

This article suggests we are in a significant bubble and that it will burst. Whilst we believe that he has a number of valid points, the fear mongering is overdone. We have advocated caution for many months now particularly given the ongoing global deterioration, but that any decline will likely be muted.

Another risk we have highlighted is that of Canada's CMHC - Canadian Mortgage and Housing Corp. Ted wrote an article last week that appeared in the Globe and Mail, titled 'Connect the housing bubble dots: There could be trouble on CMHC's horizon', see https://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/connect-the-housing-bubble-dots-there-could-be-trouble-on-cmhcs-horizon/article2310132/

We hope the Federal Government takes the appropriate action to stem this real risk.


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