Yes, Canada has a housing bubble, in fact a humongous housing bubble! Yet the Canadian government who created the bubble wouldn't acknowledge it. For those who don't know CMHC is a crown corporation which mandate is to make housing affordable (they are supposed to do that by insuring mortgages), but as usual when a government meddles in a free market the results are opposite of what was intended.

The problem is that CMHC is backed by the Canadian taxpayers. CHMC would never insure all these 5/35 mortgages if it wasn't for the government guarantee (read taxpayer) behind it. If the Canadian banks had no insurance on such subprime mortgage products like 5% down payment / 35 year of amortization mortgages or even the infamous 0% down / 40 years mortgages (now history) do you think they would offer it to anybody? I don't think so. So the mandate of CHMC is affordable housing for everybody, but all they do is make housing more and more unaffordable.

Recently the Canadian finance minister Jim Flaherty introduced several mortgage rules obviously designed to curb speculation in the Canadian housing market. But the minister has been on a record several times saying that there is no housing bubble in Canada. Why he would enact changes aiming at cooling the RE market if there's no bubble? We are not that stupid Jim, you should know that. So starting on April 19, it will be much harder for speculators to buy a CMH insured property, but hey until then they need measly 5% down and if they don’t have them they can borrow it from somewhere else (hint: their credit card).

The Canadian RE market has reached ridiculous levels and it's a matter of months at most before the whole house of cards come tumbling down. Are you ready for Canadian housing meltdown US style?