Certain parts of the financial news are abuzz with warnings of a housing bubble in parts of Canada similar to the US 2005-6 experience
This article states in part:
This is why the housing bubble and the accompanying crazy housing speculation must be maintained and further inflated, no matter what. It has become an addictive drug for the Canadian economy. Average household indebtedness is among the highest in the world. Many households are carrying little or no debt. But many others are suffocating under a mountain of debt, and a sharp decline in house prices would wreak havoc among them.
The entire economy -- including government revenues and thereby the services offered by these governments -- depends on wild property speculation. And everyone is praying that it can somehow be maintained.
This article backgrounds the buildup:
We first introduced readers to the company we said was the "tip of the iceberg in Canada's magnificent housing bubble" nearly two years ago, in July 2015 when we exposed a major problem that we predicted would haunt Home Capital Group, Canada's largest non-bank mortgage lender: liar loans in particular, and a generally overzealous lending business model with little regard for fundamentals …. Today, all those warnings came true, when the stock of Home Capital Group cratered by over 60%, its biggest drop on record, after the company disclosed that it struck an emergency liquidity arrangement for a C$2 billion ($1.5 billion) credit line to counter evaporating deposits at terms that will leave the alternative mortgage lender unable to meet financial targets, and worse, may leave it insolvent in very short notice.
…. Home Capital shares dropped by 61% in Toronto to the lowest since 2003, dragging down other home lenders. Equitable Group Inc. fell 17 percent, Street Capital Group Inc. fell 13 percent, while First National Financial Corp. declined 7.6 percent. In short, the Canadian mortgage bubble has finally burst.
One hesitates to predict doom. The bubble dynamics in Canada (and Australia) are different than the U.S. But it doesn’t appear to be business as usual, either.