North America update: A bubble and a boom both nearing their ends?
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North America certainly presents an interesting housing finance picture with big house price inflation in both Canada and the United States.
Canada’s house price inflation is bigger. Indeed, Canadian house prices surely qualify as a bubble. They have ascended to levels far higher than those at the very top of the U.S. bubble. The increases have been remarkable, and the many years of their run, with hardly a pause, has kept surprising observers (like me) who thought it would have to end before now. Canadian government officials have been worried about it for some time and have tried to slow it down by tightening mortgage credit standards and putting special taxes on foreign house buyers in Toronto and Vancouver. Meanwhile, in the U.S., house prices since 2012 – for about six years, have again been booming, fueled by the cheap mortgage credit manufactured by the Federal Reserve. Average U.S. house prices are now over their bubble peak of 2006. However, they are nowhere near the records set in Canada.
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