Everyone from the B of C to Bank economists have been sounding the alarm over the huge level of household debt. This debt is mostly related to inflated RE, either directly to purchase it, or to extract equity out of it for other expenditures.
Things could go sour very quickly.. and when they do it is VERY difficult to get out of the debt-death spiral. The US is dealing with a catastrophic situation, and if it gets any worse I worry about their civil society.
How about 15 Million unemployed, and another 11 under-employed (ie moved from full-time to part-time).
How about 43 Million on food stamps - in the wealthiest economy in the world!
Hopefully we have seen some sort of bottom, but that bottom is a long way down from where we are.
Are we so insulated from our largest trading partner's fate? We were, we had solid banking practices, higher savings rate and lower debt. But the last few years were like Canada-gone-wild. We did exactly what the US did.
The best way to prevent a calamitous RE bubble bursting is to prevent it from happening in the first place! Forget Vancouver, even places like Saskatoon and Calgary had huge price rises even though there is huge swaths of flat land around them. Kinda reminds me of Vegas.
in case we think we are immune, here's what Stephen Jarislowsky said in a Globe and Mail interview, and he is a very wise head in the investing world: