Monday, February 08, 2010
China isn't the only place where they are talking about a housing bubble again these days and this morning's papers were sprinkled with reports on the subject. It would seem that, after the events of the last ten years or so, about the only way to be sure that there is a bubble is when you hear a high ranking government official deny its existence and that's exactly what happened north of the border according to this story in the Globe and Mail.
Ottawa says housing bubble not a concernApparently, all they're asking for is a return to 10 percent down payments which, when you think about it, isn't asking all that much.
Finance Minister Jim Flaherty appears to have no immediate plans to tighten Canadian mortgage rules despite the advice of senior bankers concerned about surging home prices.
Mr. Flaherty said he sees no evidence of a housing bubble in Canada.
Easy access to risky mortgages was at the heart of the global financial collapse. Some are calling on Canada to err on the side of caution in ensuring the economy is protected from an American-style wave of mortgage defaults by homeowners.
The Globe and Mail reported Saturday that the heads of the country's six largest banks privately told Bank of Canada governor Mark Carney in November that they fear a potential collapse in house prices and the ensuing potential for economic damage.
The Wall Street Journal filed this lengthy report on the subject and the anecdotal accounts of rising prices sound just like those heard in places like California, Las Vegas, Florida, and Arizona about five years ago. Sadly, policy makers in the U.S. would likely give their left arm to be hearing reports like these and warnings that a new housing bubble is forming.