Canada’s

Housing Bust Begins!

The Most Splendid Housing Bubbles in Canada Deflates

Canadian housing markets are in a category of their own. No housing market in the US – no matter how crazy Housing Bubble 1 was, which began to implode in 2006, or how crazy Housing Bubble 2 is or was – can hold a candle to the most splendid housing bubbles in Canada. Instead of a Financial Crisis and a mortgage crisis and Housing Bust 1, the bubbliest Canadian markets only had a little-bitty dip, and within months were back on track to what would be an 18-year housing boom that is now coming undone. 

What has changed in a major way is the purchasing power of the Canadian dollar with regards to assets, particularly with regards to homes: This purchasing power has plunged. And what you’re seeing here are the effects of asset price inflation, or more precisely home price inflation.

DYI:  Prices have been dropping now for enough months to establish a trend for Canadian real estate.  My best estimation is that residential homes will drop 50% and condos as high as 70%.  This decline will take years especially as Canadian Boomers attempt to cash out melting residential prices year after year.  This is on top of a birth rate that has gone bust many years ago all way below replacement hence a much smaller generation to sell to. 

    

This will knock the hell out of the economy for multiple years as it pares back seeking equilibrium.  For those of you who are Canadian it’s time to button down the hatches.  If you are in debt get out of debt and for those of who are out of debt purchase 30 year Canadian treasury bonds alongside physical gold and silver plus shares of precious metals mining companies.  A large position of short term notes [cash equivalents] will come in handy as well.

DYI