Canada's Housing Bubble

Jan 09, 2011 Leonard Wassenaar The StarPhoenix

The StarPhoenix does its readers a great disservice by uncritically parroting Saskatchewan Real Estate Association press releases that have helped to propel the current real estate bubble.

The fact is that housing prices in Saskatoon are hugely unaffordable for the average family, and are obviously unsustainable in the long run.

The median family income in Saskatoon, according to Statistics Canada, is still around $65,000. That means the average house now costs five times income, whereas a factor of three is the historically acceptable norm.

Add to the mix rising interest rates, all-time high personal debt, tightening mortgage rules, and no shortage of land or housing development supply, and it's only a matter of time before this bubble bursts.

Nor can this be sustained by immigrants, who generally earn far less than residents.

We are not immune to the conditions that spawned the downfall of real estate in the United States. The biggest losers will be our young people and families, who have been primed to take on obscene levels of debt that could result in them owing more than their house will be worth.

Leonard Wassenaar

Osler