Madini says the housing bubble has burst

by Steve Randall14 Feb 2017

The sharp downturn in Vancouver’s housing market is not the result of the foreign buyer tax or the federal changes to mortgage regulations according to Capital Economics economist David Madini.

“We simply think the housing bubble has burst,” he wrote in his latest report, adding that bubbles are “inherently unstable because they are largely driven by unpredictable investor mania.”

The economist says that the considerable growth in house prices which continues in the Greater Toronto Area is fueled by easier-to-obtain mortgage credit and warns that overinflated prices could cause economic pain.

“The performance of the economy this year could hinge on the direction of the much larger overheated Toronto housing market,” he wrote.

He warns that affordability issues and the imbalances in the housing market could be signs of an “economic crisis in the making.”


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