As the U.S. struggles to get out of its housing slump, its neighbor to the north faces a different challenge: Canada’s housing recovery has been so rapid that some here are worrying about a bubble.
Last Wednesday, a housing-price index for Canada’s six biggest cities posted its seventh straight monthly gain, showing home prices in November are now back to their prerecession peak. Another broader measure shows the average home price in 2009 hitting a record. Home building has picked up too, with housing starts in December jumping to their highest level since October 2008. Economists expect that growth to continue when January figures are released Monday.Canada’s finance officials say they’re watching home prices carefully. The finance minister in December outlined steps he can take to cool things down, if needed. The central bank last month said it is watching the booming market with “vigilance, but not alarm.”Some observers foresee trouble. “It’s a mania. It’s going to end badly,” says Garth Turner, a former cabinet member who just published a book predicting that prices of real estate and other assets will fall.
By Phred Dvorak, Feb. 8, 2010 WSJ