Tuesday, August 31, 2010

Canada's Housing Bubble

Threat of Housing Bubble Has Resurfaced
Canada's housing market could still be in for a U-S style correction, despite a slow down in home sales across the country. The warning comes from the Canadian Centre for Policy Alternatives, which released a report that analyzed the factors that cause a bubble. A real estate bubble is an artificial increase in property values which maxes out a homeowners ability to pay. When the bubble bursts, and values drop, owners are stuck with mortgages worth more than their homes. The CCPA found that prices in six of the country's largest housing markets, including Calgary, have hit 30-year highs and are in bubble territory. It says home prices are roughly five to 11 times greater than Canadians' annual income -- much higher than historical comfort levels.

An Accident Waiting to Happen

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