{"id":6459,"date":"2017-07-20T11:11:32","date_gmt":"2017-07-20T18:11:32","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=6459"},"modified":"2017-07-18T22:07:20","modified_gmt":"2017-07-19T05:07:20","slug":"the-anatomy-of-historic-housing-bubbles","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2017\/07\/the-anatomy-of-historic-housing-bubbles\/","title":{"rendered":"The Anatomy of Historic Housing Bubbles"},"content":{"rendered":"<p style=\"text-align: justify;\">DBRS has compared several housing bubbles dating back to the late \u201880s with Canada\u2019s rapid growth in home prices and credit in recent years.<\/p>\n<p style=\"text-align: justify;\">The credit-rating agency\u2019s findings suggest that even if Canada\u2019s housing market is in a bubble, far bigger ones have existed before in terms of those two metrics.<\/p>\n<p style=\"text-align: justify;\">For example, the runups in Canadian home prices and household borrowing since 2012 are less rapid than in every historic example DBRS examined but one: the pre-recession US housing boom.<\/p>\n<p style=\"text-align: justify;\">\u00a0\u00a0\u00a0\u00a0 <a href=\"https:\/\/www.roryc.ca\/blog\/wp-content\/uploads\/2017\/07\/bubbles.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone  wp-image-6460\" src=\"https:\/\/www.roryc.ca\/blog\/wp-content\/uploads\/2017\/07\/bubbles-300x123.jpg\" alt=\"\" width=\"576\" height=\"236\" srcset=\"https:\/\/www.roryc.ca\/blog\/wp-content\/uploads\/2017\/07\/bubbles-300x123.jpg 300w, https:\/\/www.roryc.ca\/blog\/wp-content\/uploads\/2017\/07\/bubbles-768x314.jpg 768w, https:\/\/www.roryc.ca\/blog\/wp-content\/uploads\/2017\/07\/bubbles.jpg 1024w\" sizes=\"auto, (max-width: 576px) 100vw, 576px\" \/><\/a><\/p>\n<p>\u201cCanada\u2019s real five-year credit growth to date is comparable with the United States (2002-2007),\u201d reads the DBRS report containing the side-by-side comparison.<\/p>\n<p style=\"text-align: justify;\">\u201cWhile not an extreme case, real credit growth in Canada has expanded quickly, which suggests an elevated level of risk in the event of a housing market correction,\u201d the report continues.<\/p>\n<p style=\"text-align: justify;\">Home prices also soared higher from to 2012 to 2017 in Canada than they did in the US from 2002 to 2007.<\/p>\n<p style=\"text-align: justify;\">However, recent gains don\u2019t stack up to what was observed during the late-\u201880s in Canada. They are also less dramatic than the parabolic increases recorded in the UK in the late-\u201880s and early 2000s, as well as Spain in the five-year period ending in 2007.<\/p>\n<p style=\"text-align: justify;\">And DBRS outlines multiple ways in which the Canadian financial system of today is more insulated from the effects of a crash than America\u2019s was ahead of that country\u2019s last housing bust.<\/p>\n<p style=\"text-align: justify;\">For one, Canadian borrowers face a more rigorous mortgage-qualification process in Canada. \u201cCanadian underwriting standards have become progressively stricter over the last decade,\u201d DBRS notes.<\/p>\n<p style=\"text-align: justify;\">Another factor is strong population growth in large Canadian urban centres, a trend that feeds demand for housing. Population growth is often touted as a fundamental driver of home prices in the Greater Toronto Area, Canada\u2019s biggest housing market.<\/p>\n<p style=\"text-align: justify;\">There\u2019s also more regulation in place that guards against a sub-prime mortgage crisis of the kind that roiled the US market and helped spark the Great Recession.<\/p>\n<p style=\"text-align: justify;\">\u201cThe Big 6 [Canadian banks] tend to hold high-quality mortgages,\u201d says DBRS.<\/p>\n<p style=\"text-align: justify;\">\n<p><a href=\"http:\/\/news.buzzbuzzhome.com\/2017\/07\/anatomy-of-historic-housing-bubbles-canadas-market.html\" target=\"_blank\" rel=\"noopener\">The Anatomy of Historic Housing Bubbles &amp; How Canada&#8217;s Market Compares<\/a> by Josh Sherman<\/p>\n","protected":false},"excerpt":{"rendered":"<p>DBRS has compared several housing bubbles dating back to the late \u201880s with Canada\u2019s rapid growth in home prices and credit in recent years. The credit-rating agency\u2019s findings suggest that &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2017\/07\/the-anatomy-of-historic-housing-bubbles\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[],"class_list":["post-6459","post","type-post","status-publish","format-standard","hentry","category-real-estate"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The Anatomy of Historic Housing Bubbles &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2017\/07\/the-anatomy-of-historic-housing-bubbles\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"The Anatomy of Historic Housing Bubbles &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"DBRS has compared several housing bubbles dating back to the late \u201880s with Canada\u2019s rapid growth in home prices and credit in recent years. 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