It has been painful to watch the housing turmoil in the last few years play out in the U.S. After seeing the devastating impacts on the entire economy from this housing downturn, many market observers have pointed to China as a frothy real estate bubble that will likely pop soon. However, you might be surprised to learn that -- up until very recently -- there were bidding wars going on for homes in Canada.
Canada might be America's neighbor to the north, but it has a bubbly real estate market, even as the U.S. market continues to limp along. Consider these eye-raising facts:
- Canada's real estate prices have increased on average 40% in the last year while incomes have dropped.
- Canadian residential real estate is now worth more today than it was pre-Lehman.
- There are now more dwellings built in Canada (assuming, as the Canadian government does, that an average of 2.3 people live in each dwelling) than the population of Canada.
- Canadian consumers have racked up enormous debts while interest rates have been low over the past 20 months.
Canada's position in the global economy is much more positive but this does not mean that care should not be exercised as the potential of a housing bubble developing is a real possibility.
