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Is Canada heading for a housing crash? Record-high household debt and ever-rising home prices point in that direction. This report looks at the real story behind the headlines. What we found might surprise you.
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News headlines often point to a looming housing crash in Canada — a believable story given the U.S. financial crisis fresh in our memory, the ballooning house prices in some of Canada’s largest cities and record high household debt levels among Canadians.
The real story behind the headlines shows that the issue is more complex than statistics might show. Household debt and elevated home prices are not enough on their own to generate an economic crisis. In fact, a U.S.-style housing crash is highly unlikely in Canada for several reasons:
We must be clear that Canada is not without its own unique risks. There remains the ever-present risk of a hidden credit quality problem, made possible by the rise of lesser regulated non-bank mortgage lenders and mortgage aggregators.
However, the largest risk to Canada’s housing market remains the possibility of a cyclical downturn caused by rising interest rates or a potential shock to unemployment. When looking at the 2008-09 financial crisis in the U.S., Canada has very few of the ingredients that would turn a cyclical downturn in housing into a full-blown crisis, suggesting that a lack of affordability may be a permanent fixture in Canada’s largest urban centres.
This event has multiple dates and locations. See event details for more information.
This webinar discusses current developments that will affect your firm, including CPA Canada's new tools to assist in the implementation of new auditor reporting, accounting and tax updates, and a session on artificial intelligence.
Are you a practitioner who performs agreed-upon procedures engagements or a user of agreed-upon procedures reports? Attend this webinar to learn about the AASB’s proposed standard.
February 27, 2019
Transformative leaders understand the importance of emerging trends and strategic planning. Invest in skills that will help you navigate the risks and opportunities of disruption.