Is the Bubble About to Burst?

Everyone is talking about a housing bubble bursting, but I think the first thing you need to decide is whether there actually is a bubble.

I watch the media headlines each day, and have picked a few below that perhaps are a good indication of why consumers are confused about the answer to the question I posed. (I know I am)

“Everything you need to know about Canada’s housing ‘bubble’”

“Is Canada immune from a housing bubble?”

“New hints of ‘soft landing’ for housing market as construction hums along”

“Toronto’s tallest condo towers designed for bull market that no longer exists”

“Average sale price for Hamilton property jumps $45,000 from last September”

“Home sales edge lower”

“Home sales drop 15% in September as prices edge higher”

“New rules may be slowing home sales”

“Canadian’s debt soars into danger zone”

“Are we worrying ourselves into a housing crash?”

These headlines have all appeared within the last 2 weeks, and show just how all over the map our supposed experts are in suggesting what the market is doing.

The full story for the first headline can be found at http://tinyurl.com/9u63885. The article clearly outlines the case for a bubble, but stops short of predicting a market crash similar to the US.

The full story for the last headline can be found at http://tinyurl.com/99mdl56.  This article has an interesting take on the market too, with the opposing position that we are not heading for a repeat of the U.S. situation.

The important thing to remember when looking at what the market is doing, is that real estate is a local business. Headlines are designed to catch your eye and make you read the article. They are generally very broad in the information provided, stating facts based on national information. It is important to realize that the national numbers are affected to a huge extent by the Toronto and Vancouver markets. Hamilton and area in contrast to these markets has not seen the fast run up in prices over the past few years, and accordingly is very unlikely to see the correction that is being predicted in the form of the bubble bursting. So my best guess is NO, there is not a local housing bubble. (hey, but don’t hold me to it!)

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