Canada's Housing Bubble Essay
CANADIAN BUBBLE, EH?
How real is Canada's housing bubble anyway? More real than any other countries. That is due to the following facts that I will present below, but first it is better to start with a little history. In the year of 2008, as stated on Statistics Canada, the recovery of the recession was much quicker than in other recession period such as in 1981-1982 and 1990-1992. However, was it a real recovery or an illusion? In 2011, Globe and Mail published an article on why Canada’s recession was not as brutal. In summary, Philip Cross explored what factors caused the impulsive slide, and why the downturn was not nearly as severe as in previous recessions, here are some of his findings: * Jobs contracted at only half the rate at which output fell during this recession. * May, 2009, seems to be the low point for monthly GDP, “when widespread plant closures in the auto industry as two major firms went bankrupt depressed output, and the same month was the low in hours worked.” * …show more content…
It ignores the big elephants in the room.” The elephants Madani sees include a sharp run-up in house prices compared to income: the average Canadian home now costs five times the average income, well above the multiple of three that is considered affordable. There’s also a sharp rise in home ownership rates, which at about 68 per cent of Canadians mirrors closely the 69 per cent at the top of the U.S. bubble. Madani also points to continued overbuilding and Canada’s still healthy construction industry. New building permits reached $6.8 billion in December, a 4.5-year
How real is Canada's housing bubble anyway? More real than any other countries. That is due to the following facts that I will present below, but first it is better to start with a little history. In the year of 2008, as stated on Statistics Canada, the recovery of the recession was much quicker than in other recession period such as in 1981-1982 and 1990-1992. However, was it a real recovery or an illusion? In 2011, Globe and Mail published an article on why Canada’s recession was not as brutal. In summary, Philip Cross explored what factors caused the impulsive slide, and why the downturn was not nearly as severe as in previous recessions, here are some of his findings: * Jobs contracted at only half the rate at which output fell during this recession. * May, 2009, seems to be the low point for monthly GDP, “when widespread plant closures in the auto industry as two major firms went bankrupt depressed output, and the same month was the low in hours worked.” * …show more content…
It ignores the big elephants in the room.” The elephants Madani sees include a sharp run-up in house prices compared to income: the average Canadian home now costs five times the average income, well above the multiple of three that is considered affordable. There’s also a sharp rise in home ownership rates, which at about 68 per cent of Canadians mirrors closely the 69 per cent at the top of the U.S. bubble. Madani also points to continued overbuilding and Canada’s still healthy construction industry. New building permits reached $6.8 billion in December, a 4.5-year