Companies sending employees to Canada would be wise to prepare their relocation policies for a possible housing bubble burst.
Canada has ominous economic indicators that, according to many experts could soon be reflected in lower real estate prices. What does that really mean? It could point to a painful Canadian housing correction on the horizon, similar to that experienced in the U.S., causing concerns for relocation strategy.
"Let the Good Times Roll" or "Look Out Below"
Canada's real estate market has been one of the hottest on the planet in recent years. Yet a diverse and growing number of economic forecasters believe that Canada's high home prices relative to incomes, record household debt levels, overinvestment in residential construction, and a slowdown in demand could cause a sharp correction in residential real estate in the near future.
Home ownership in Canada is currently at 70%. Home ownership in the U.S. at the peak of its housing bubble was 69%.
Canadian household credit market debt (including mortgages, consumer credit and loans) is hovering at around 150 percent of income.
There have been mounting job losses in finance, insurance, and real estate in Canada--especially in Toronto where the unemployment rate has risen to 8.6%.
Given the circumstances, ask yourself this: If I had seen a correction coming before and knew the outcome, what would I have done differently? As Canada shows many of the signs of a classic bubble--and the timing and consequences of all bubbles or pops are difficult to forecast--perhaps the best time to ask that question and take heed...is now.
To access the complete NEI article, including suggestions for revisiting your Canadian relocation policies, click here: Northern Homeowner Exposure .