Carney says market will correct; U.S. economists not so sure - MoneySense

Carney says market will correct; U.S. economists not so sure

Bank of Canada Governor Mark Carney spent the last two years warning Canadians on a possible housing market correction. Two U.S. economists are not as convinced.

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Bank of Canada Governor Mark Carney continues to warn Canadian’s about the potential for an over-heated housing market. Speaking at the Vancouver Board of Trade this week, Carney cautioned Canadians on the impact of rising interest rates and the almost certain price correction for the nation’s real estate market.

While, there’s little doubt that the Vancouver market is hot (primarily due to foreign speculators pumping up prices) in recent months there’ve been mixed signals as to whether or not this anticipated price correction will impact all of Canada or just certain markets.

Then there are outsider opinions. About a month ago, Bank of America Merrill Lynch economists Ryan Bohren and Sheryl King commented on a potential Canadian housing bubble. They believe that Canada continually expanding economy will negate the stretched prices — which are a result of aggressive speculation, overly optimistic price expectations and excessive home building — and prevent a tipping point and bubble burst.

At least Carney can agree with these U.S. economists on one thing: speculation from foreign investors is inflating prices in Vancouver.

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