165
Canada likely sitting on the largest housing bubble of all time: Strategist - BNN Bloomberg
(www.bnnbloomberg.ca)
this post was submitted on 23 Aug 2023
165 points (96.6% liked)
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The last time a housing bubble popped, so did the entire economy.
You sure you're ready for that?
Not the same at all. The previous housing bubble was a result of widespread fraud by the banks. Now, people know very well to look out for that exact thing happening, and it isn't.
If there is a bubble right now, which there probably is, it is a speculative bubble. People believe that housing will forever quickly grow in price, so they are willing to pay above reasonable price to not miss out on the opportunity. Which in turn increases the prices further. It's a self-sustaining cycle, but at some point there won't be enough capital to sustain it any longer. Can happen in a year, can happen in a decade, can happen tomorrow.
Yes, I am ready for that. I don’t buy this “but the economy” line. It smacks of “too big to fail”, and I think that occasional failure is necessary and healthy.
You haven't lived through enough cycles then.... Even 2008 saw a million people in Canada lose their jobs. The one in the early 90s was probably double that.
Besides, nobody understands what the real numbers would even be. Do you know how much of an implosion is required to return Vancouver or Toronto to "affordable" levels? Prices would need to drop something around 80-85%. That's absolutely massive, and would wipe out the life savings of 10 million Canadians, who are now going to need more government support to make it through retirement.
There are ways to fix this problem, but they need to be gradual to not end up causing more problems than they fix.