The Blubber

More than a third of young people in Canada have said they are foregoing children because they can't afford a proper home for them, per the National Post.

The Canadian housing market is currently facing a high risk of unraveling, according to expert analysis. The precarious situation is primarily attributed to the significant level of debt that Canadians have taken on in comparison to their incomes. Should mortgage rates continue to rise, which is a likely scenario, many Canadians could find themselves in financial distress.

Phillip Colmar, a partner at Global Strategist at MRB Partners, highlighted these concerns in an interview with BNN Bloomberg. Colmar went so far as to assert that Canada is potentially sitting on the largest housing bubble in history.

He attributes the inflated home prices in Canada to two decades of easy money provided by the Bank of Canada's monetary policies. Now, with the prospect of mortgage rates increasing, especially as Canadian bond yields rise, the risk is heightened, particularly given the already elevated debt-to-income ratios.

Colmar stressed that the situation is exacerbated by a significant credit bubble lurking beneath the housing bubble. The substantial amount of Canadian leverage in the financial system relative to incomes is a cause for concern, particularly with the noticeable increase in debt servicing costs.

While Canadian banks are making efforts to stabilize the housing market, Colmar believes that a housing market downturn may be inevitable. Factors such as rising mortgage rates, an increase in unemployment, or the onset of a recession could potentially trigger a deleveraging cycle in the housing market, leading to significant financial challenges for homeowners.

Read more: https://unusualwhales.com/news/canada-likely-sitting-on-the-largest-housing-bubble-of-all-time-per-phillip-colmar