Canadian housing market crash not in the cards
Contradictory to what the central bank said that the Canadian housing market could be overvalued by as much as 10 to 30 percent, Governor Stephen Poloz said on Thursday that the Bank of Canada does not foresee any sharp rise of unemployment and mortgage rates that might trigger a major housing market correction. Speaking in New York, Mr Poloz said that the probability of such a big drop in prices is low.
" The risk comes when some catalyst sets off the vulnerability", he said. " In this case it would be, let's say, a rise in unemployment, a significant rapid rise in mortgage rates, neither of which we're expecting"
He also told an Economic Club of New York business audience that he doesnt think of the Canadian housing in "Bubble" or in any "Bubbly-type" way. He also said that a return to sustainable economic growth which Canada is estimated about two years away, would require continued financial innovation. He pointed a need for expansion and innovation in terms of bond financing; securitization to create new high-quality, low-risk products; peer to peer lending; and public-private partnerships.