Five reasons I’m not worried about a Canadian housing bubble

This weekend I shared this Globe & Mail story about the hedge fund manager betting big against Canada, specifically the Canadian banking sector, housing market and the country’s currency. He sees a crisis coming for the real estate market up north that will wreck the economy.

It’s an interesting view, but one that I think will be wrong.

Five quick reasons why:

1. A lot of the money fueling the boom is coming from Asians (especially from China) who want to get some assets outside their country. Real estate is how they’re doing it. A new boom in China fuels more of this as there is more money to be invested. A crash in China fuels it even further as the newly minted millionaires and billionaires seek to protect even more of their wealth from local conditions. It’s virtually guaranteed to continue.

2. The rest of the money is coming from gold mining, oil drilling and nat gas discovery. Gold may be in or out of fashion, but its been a Canadian mainstay industry since the flag was first planted. It is endogenous to their culture and way of life. Oil and gas prices rise or fall but the underlying need and demand really don’t. In short, the prices of materials fluctuate but its not likely that activity in finding and producing these materials will ever stay down for long.

3. Have you met any Canadians? Outside of hockey arenas and beaver-trapping blinds, they tend to be well-educated, clean, smart, well-mannered, fastidious and responsible. Yes, this is a stereotype, but most stereotypes contain a kernel of truth, it’s how they get started to begin with. Look at the loan-to-value rates in Canadian housing, look at the percentages of equity being put down, look at the sheer amount of activity taking place with cash on the barrel head and no debt. It’s hard to call this a mania or a free-for-all.

4. Canada’s housing supply is mostly igloos, which will eventually melt, thus preventing massive overstock in the market place. This factor should keep pricing somewhat stable over time.

5. I don’t have a fifth, it’s been a long day, add your own below.

 

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. diamond painting supplies commented on Sep 18

    … [Trackback]

    […] Read More Info here on that Topic: thereformedbroker.com/2013/04/29/five-reasons-im-not-worried-about-a-canadian-housing-bubble/ […]

  2. w88 commented on Sep 20

    … [Trackback]

    […] Info on that Topic: thereformedbroker.com/2013/04/29/five-reasons-im-not-worried-about-a-canadian-housing-bubble/ […]

  3. bitcoin evolution review commented on Oct 02

    … [Trackback]

    […] Read More Info here on that Topic: thereformedbroker.com/2013/04/29/five-reasons-im-not-worried-about-a-canadian-housing-bubble/ […]

  4. rbc bank online login commented on Nov 14

    … [Trackback]

    […] Read More Information here on that Topic: thereformedbroker.com/2013/04/29/five-reasons-im-not-worried-about-a-canadian-housing-bubble/ […]

  5. best dumps shop commented on Nov 16

    … [Trackback]

    […] Find More Info here to that Topic: thereformedbroker.com/2013/04/29/five-reasons-im-not-worried-about-a-canadian-housing-bubble/ […]

  6. professional carpet cleaning baldock commented on Nov 30

    … [Trackback]

    […] Information to that Topic: thereformedbroker.com/2013/04/29/five-reasons-im-not-worried-about-a-canadian-housing-bubble/ […]

  7. 안전공원 commented on Dec 10

    … [Trackback]

    […] Here you will find 18610 additional Info on that Topic: thereformedbroker.com/2013/04/29/five-reasons-im-not-worried-about-a-canadian-housing-bubble/ […]

  8. unsold hotel rooms commented on Dec 15

    … [Trackback]

    […] Read More on that Topic: thereformedbroker.com/2013/04/29/five-reasons-im-not-worried-about-a-canadian-housing-bubble/ […]

  9. diamond painting kits commented on Dec 17

    … [Trackback]

    […] Info on that Topic: thereformedbroker.com/2013/04/29/five-reasons-im-not-worried-about-a-canadian-housing-bubble/ […]

  10. fake watches commented on Dec 17

    … [Trackback]

    […] Find More on on that Topic: thereformedbroker.com/2013/04/29/five-reasons-im-not-worried-about-a-canadian-housing-bubble/ […]

  11. Harold Jahn Utah commented on Dec 19

    … [Trackback]

    […] Here you will find 39029 additional Information on that Topic: thereformedbroker.com/2013/04/29/five-reasons-im-not-worried-about-a-canadian-housing-bubble/ […]

  12. Regression Testing commented on Dec 20

    … [Trackback]

    […] Read More Info here on that Topic: thereformedbroker.com/2013/04/29/five-reasons-im-not-worried-about-a-canadian-housing-bubble/ […]

  13. 안전공원 commented on Dec 24

    … [Trackback]

    […] There you will find 19968 more Information to that Topic: thereformedbroker.com/2013/04/29/five-reasons-im-not-worried-about-a-canadian-housing-bubble/ […]

  14. fake rolex commented on Dec 29

    … [Trackback]

    […] Info to that Topic: thereformedbroker.com/2013/04/29/five-reasons-im-not-worried-about-a-canadian-housing-bubble/ […]

  15. wigs for women commented on Jan 14

    … [Trackback]

    […] Read More to that Topic: thereformedbroker.com/2013/04/29/five-reasons-im-not-worried-about-a-canadian-housing-bubble/ […]