A New Kind of Crazy in Canada Housing

There’s lots of crazy stuff going on in the world these days, both global finance and geopolitics-wise, but one of the crazier elements of the former has been the continuation of what, for many years, has appeared to be an unstoppable asset bubble (yes, that’s an oxymoron) in Canada’s housing market that, recently, appears to be veering toward a pin.

This chart of home prices from Vikram Mansharamani serves as a timely reminder of how nuts it’s been north of the border and how much potential currently exists for an unpleasant change in direction for that light violet curve.

Surging household credit, soaring home prices, tumbling oil prices, and now an admission by the Bank of Canada that they really don’t understand what’s been driving Canada’s housing market make this a situation that is just begging for a resolution of some sort.