Yuriy Balko Sales Representative

Yuriy Balko Sales Representative

Bank of Montreal (TSX:BMO) Just Declared a Housing Bubble: Is a Crash Coming?

“Let’s drop the pretense,” says Douglas Porter, the chief economist at Bank of Montreal (TSX:BMO)(NYSE:BMO). “The Toronto housing market, and the many cities surrounding it, are in a housing bubble.” Later in the same report, he commented that Toronto home prices have seen “the fastest increase since the late 1980s, a period pretty much everyone can agree was a true bubble.”

Those are some pretty strong words for a well-respected economist who is typically fairly conservative in his predictions. For example, in 2016, a year when many bears were calling for a housing collapse, Douglas Porter was hesitant to call a bubble right then and there. “Da Bears may someday be right, especially on the hottest markets,” he said in a report a few years ago. “But getting the timing down is half the challenge.” He went on to predict continued strength in the housing markets, noting that demand for houses in Canada’s largest cities continued to outstrip supply.

So, after years of remaining skeptical that Canada’s housing market was in bubble territory, what’s made Bank of Montreal’s chief economist change his tune? Should you anticipate a crash in 2019?

Bubbles are appearing in more than Toronto’s housing market

Perhaps if Toronto was the only housing market in bubble territory, the potential fallout wouldn’t be so severe. Unfortunately, it’s looking like Canada’s third largest city, Vancouver, is beginning to show some cracks.

Swiss-based UBS Group AG recently released its Global Housing Bubble Index, which ranked Toronto and Vancouver in the top five international cities likely to be in bubble territory. Hong Kong and Munich were the only markets with higher risk ratings. Of major concern, the report noted that these bubbles might be ready to pop. “The first cracks in the boom’s foundation have begun appearing,” the report noted. “House prices declined in half of last year’s bubble risk cities.”

But if you’re waiting for a crash, keep waiting

Clearly, across multiple indicators, the housing markets in both Vancouver and Toronto have been overheated for an extended period of time. But as Douglas Porter noted in 2016, the bears have been consistently wrong for years. A recent report from Royal Bank of Canada (TSX:RY)(NYSE:RY) tells housing market bears “don’t hold your breath.” It went on to highlight that whenever stresses were introduced to the market, new buyers quickly “jumped back into the market,” stemming any temporary losses.

Perhaps that type of behaviour can’t last forever, and it certainly can’t persist at forever increasing prices, but the fact remains that calling a bubble is very difficult to do. But when bubble’s pop, they can impact financial returns for long periods of time.

Over the past 60 years, for example, Toronto’s housing market has seen three periods of multi-year decline: a five-year decline starting in 1958, an 11-year decline starting in 1974, and a 7-year decline starting in 1989. The most recent Toronto housing bull market has lasted for more than 20 years!

But beware: even small market dips can have outsized effects on Canada’s banking stocks. During the 2007 and 2008 turmoil, housing prices were impacted for less than 12-months in Canada’s largest markets. Yet the stocks of major banks fell as much as 70%. Bank of Montreal shares fell from $70 to $30, Royal Bank of Canada fell from $60 to $30, and Toronto-Dominion Bank (TSX:TD)(NYSE:TD) fell from $35 to $18.

Bubbles may be hard to predict, but their impact on banking stocks are well-documented. If you’re concerned with capital preservation but have investments in Canada’s banking sector, now may be a good time to start taking some chips off the table.

Comments

Celtic Zodiac Signs

I admire your writing skills as you write in a good flow! The Celtic Zodiac Signs lay specific importance on the animals & trees. Read further to explore more!

Best Free Sports Streaming Sites

This is a wonderful article. You have given so much info in it. These type of articles keeps the user’s interest in the website, and keep on sharing more. Also, you can read this: Free Sports Streaming Sites

Great Post with Informative Information

Great post! You really amazed me with your post. This is so helpful. Read about Aaj Ka Kark Rashifal with an easy and simple click. .

Insightful. real estate

You have remarked very

You have remarked very interesting points! roblox granny game

Our approach

Our approach brings together best-in-class virtualized compute, storage, and networking infrastructure.

load balancer in uae

security partner in UAE

virtualization partner in uae

mobility partner in uae

multiple learning environment

Provides multiple learning environment of International standard with holistic system of education at an affordable cost for the successful life of young generation.

paramedical College india

best agriculture college in dehradun

best agriculture college in north india

the world of gaming

Welcome to the world of gaming, where life is fast paced and interesting. There is always an adventure waiting for you online.

csgo accounts

The Health system is created

The Health system is created in a proficient way of expanding the network in the multispecialty services. With the ever-growing population, the hospital has announced many ambitious plans that have ultimately lead to the excellence.
IVF center in hisar
test tube baby hospital in hisar
The goal of the society is to create professionally well skilled students To achieve the said goal, arrangements have been made with the pioneers and front runners both in India and abroad.
best school in dehradun

We offer calculated

We offer calculated visibility for the design and development of technology platforms through ourintensive research-based approach, consistency in performance, and adept decision-making caliber.

website development company in malaysia

digital marketing services in singapore

search engine optimization services in malaysia

online digital marketing in malaysia

Today,

Today, SRSG has emerged as one of the leading full-service player offering an array of products and services for system integration, broadcast consultancy, IT infrastructure services, maintenance services and digital archiving services for the broadcast industry.
apple reseller in Kolkata
apple authorized service center in delhi
system integration service providers
ipad service center in bhubaneswar
iMac reseller in mumbai

2. Moonlight Films and

2.
Moonlight Films and Theatre Studio operates under the Moonlight Films and Theatre Society , a non-profit association whose goals are to spread knowledge of and interest in theatrical and media arts through education.
Acting school in delhi

Our academic pursuits, along

Our academic pursuits, along with a range of extracurricular activities, help in honing a child's skills and ensuring that he/she grows to be a mature and responsible citizen.

best school in greater noida

Engineering

Engineering as a subject combines mathematics, logic and science to find solutions to our daily life problems. Over the last few decades, engineering as a profession has seen vast expansion.

top engineering college

top MBA college in chandigarh
mechanical engineering college in chandigarh

Private management college in punjab

college with best placement in punjab

Kane Rhodes

Thank you for telling us the report of the Bank of Montreal as we are looking for superiorpapers reviews property in this major city of Canada. I am cheerful to see your job of writing articles for the folks who wanna buy property in Montreal.

Have Questions?

I agree to receive marketing and customer service calls and text messages from Royal LePage Terrequity Realty Brokerage*. Consent is not a condition of purchase. Msg/data rates may apply. Msg frequency varies. Reply STOP to unsubscribe. Privacy Policy & Terms of Service.
Royal LePage Terrequity Realty Brokerage**Independently Owned & Operated416-496-9220100-200 Consumers Rd, Toronto, Ontario
Toronto real estate leads by iNCOM Web & e-Marketing Solutions