Some thoughts on Canada’s housing market

This is a more in-depth follow-up piece to the free article I wrote yesterday. In the wake of the recent Ira Sohn conference and the revelation that hedge funds are starting to short housing-related Canadian stocks, there is a lot of bubble talk in the press. I believe this talk is well-founded. I have predicted the bubble starts to burst this year. Canadian house prices are overvalued both in relation to rent and to property income. The question is not whether these price variables will revert to mean, it is about how violently and how much the denominators rise or the numerators fall. And this is significant because the Canadian economy has become one big housing bet.
This is a long-form version of the daily commentary. So I am not going to take a strong view per se. However, I am going ...

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