It never seems to end. The Canadians are doing a repeat of what we did a few years ago. There lending has been more cautious than ours was (doesn’t take much), so it has taken them a little longer to get to the breaking point.
One odd story is the sub-story noted below about Chinese, obviously the wealthy Chinese, seeing Canada as a safe haven.
This stems from Canada’s policy when the British lease on Hong Kong ran out, and they had to return it to the Chinese. A number of citizens of Hong Kong wanted to leave, or at least get a back up if things went sour. The Canadians obliged anyone who was willing to pay their high fees. Thus reaping the most well off and industries group of immigrants you could care for.
It is similar to wealthy Americans moving to Costa Rica, but a little better thought out. The Chinese are not trying to find the cheapest nice place to live. They are trying to find the nicest safe place.
Some Economists See Canada’s Market Ripe for a Correction, With Debt Rising to Worrisome Levels. Monica Gutschi and Don Curren, The Wall Street Journal, March 29, 2011.
The debt-to-disposable-income ratio for Canadian households rose to 148.9% last fall, according to Canadian government statistics, surpassing American borrowing for the first time since 1998. At the same time, the Bank of Canada has recently pointed out that the amount of home-equity loans has risen as much as 170% in the past decade and now represents about 10% of overall household debt.
A recent survey by the Bank of Montreal found that 18% of Canadians would struggle to meet their mortgages if their payments went up, though the bank didn't give specifics about how much the payments would need to rise.
One of the things buoying Canada's market is a global trend that has seen Asian—particularly Chinese–buyers snap up homes in places from Europe to Australia and to Canada, particularly on the West Coast. Chinese buyers have stampeded in to Vancouver and to Toronto, two of Canada's hottest markets.
Cam Good, a real-estate marketer in Vancouver, said he has sold 700 homes in the Vancouver area so far this year, 60% of them to Chinese immigrants. "That's probably consistent for the whole market," he said. "They're the biggest group for everybody."
Mr. Good has seen so much business out of China that his company, The Key, opened an office in Beijing last month and is planning another. One of his strategies is to arrange chartered jets to bring potential buyers from China.
"Canada is seen by Chinese people as a safe haven," he said.