A Bubble in Canada?

May 4, 2010

Bubble Trubble by Taku

A new report released on Tuesday, by the Edward Jones investment firm, claims that in Canada a housing bubble may well be slowly developing. The reason is that the prices of homes are increasing much faster than economic fundamentals warrant.

The report claims that Canada, although not going through a decline like so many other countries, such as the US, is now showing a similar pattern found in those countries before their actual decline took place. Specifically, overvalued house prices and easily obtainable credit can be seen in our country. Canadian investors should therefore be prepared “for the possible impact of a housing downturn on the economy”.

I think the report said it very well. In spite of the fact that Canada, fortunately, did not have to experience such a terrible recession and a poor housing market as many other countries did, we should not forget our economy is certainly not in the clear. There are many possible threats are out there. We had better watch out!

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