Do you know what Canada, the U.S., China and Ireland all have in common? If you guessed that they have all experienced, or are currently experiencing, a housing bubble, give yourself a gold star. As all bubbles ultimately do, the Canadian housing bubble is on the path to bursting. The good news, according to recent CIBC (Canadian Imperial Bank of Commerce) reports, is that Canadians are in much better shape than their neighbors to the south—despite the fact that the U.S. household debt as a percent of disposable income barely touched 130% at the peak of the bubble, whereas the Canadian ratio is above 160% and climbing.
According to CIBC economist Benjamin Tal, the thing that makes Canada’s housing bubble different from the catastrophic U.S. real estate bubble that burst in 2006 is borrower profiles.