Two Merrill Lynch economist report the real estate market in Canada is on the tipping point of a US style meltdown. In fact it's just a matter of time before the crisis happens and our overextended, hyper-leveraged population is going to see the same type of economic suffering that the US economy is currently battling.
"We fear . . . it may simply be a matter of time (before) . . . housing and credit markets in Canada crack," "Markets remain overly sanguine with respect to the prospects for the Canadian housing market, the financial sector and the overall economy." Merrill Lynch Canada Inc. analysts David Wolf and Carolyn Kwan
They are certainly brave to come out with news like that.
Almost every other analyst around is refuting the chance of a US style meltdown in Canada. The circumstances are simply not the same. Although we may be over leveraged and overextended there is no comparison to the sub-prime mess in the US.
Already markets in Alberta are starting to level out and the slight declines (about 10%) we saw over 2008 are stabilizing. By 2009 the market will be balanced and we should see a decrease in the high inventory of real estate properties.
"Price advances had been supported by fundamentals - strong employment and low interest rates - not softening credit conditions. Canada's real estate market is therefore not overvalued, a finding confirmed through a recent study published by the IMF," report by Desjardins senior economist Hélène Bégin.
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