Canada's Housing Bubble

Apr 07, 2010 John Ackermann news1130.com

Vancouver - The dream of owning a home is about to become out of reach for even more Canadians. It looks like a "perfect storm" brewing that will keep more people out of the market.

Homebuyers are in a panic for three reasons: Number one - new mortgage rules taking effect on the 19th that will make it tougher to borrow.  Number two - the harmonized sales tax taking effect here and in Ontario as of Canada Day. And number three - the very good possibility the central bank will hike short-term interest rates (which would influence variable rate mortgages).

That real-estate trifecta is fueling a buying frenzy. Last month sales were up in Metro Vancouver 38.5 percent from the same period in 2009, while prices are up just over 20 per cent from last year.  But some analysts do admit this rush may cause a crash this fall, leading to lower prices for those who can still buy.