Canada’s housing market has been relatively stable over the past year, with the notable exception of Toronto, which has overtaken Vancouver as the country’s hottest real estate market. Prices in Canada’s largest city have risen 10.5% over the past year and there are now three times as many cranes dotting Hog Town’s skyline as there are in the Big Apple. Many analysts are becoming increasingly concerned that some cities — notably Toronto, Vancouver and possibly Calgary — are in the midst of their own U.S.-style housing bubble. A document written by the country’s financial regulator and obtained earlier this year through an access to information request, expresses concern over the “emerging risk” of Canadian loans that “have some similarities to non-prime loans in the U.S. retail lending market.” Bank of Canada Governor Mark Carney continued to sound the alarm as well last week over the growing level of household debt, while maintaining the overnight lending rate at a near-record low level of 1%. The question remains as to why prices in Toronto and Vancouver — where the economy is stagnant — are rising so fast, and not in cities like Edmonton and Saskatoon — where the economy, and population, is booming. Financial Post columnist Diane Francis caused quite a stir recently, by arguing that the Canada Mortgage and Housing Corporation’s (CMHC) policies have led to a “deluge of hot money from abroad that is creating an artificial and potentially dangerous real estate bubble.” Her solution: “A ban on foreign buying of residences.” Ms. Francis is at least partially correct. The CMHC controls a majority of our mortgage insurance and securitization markets, and guarantees 100% of the principle and interest on insured residential mortgages. Meanwhile, the Bank of Canada has maintained interest rates at artificially low levels, which only serves to temporarily inflate the market, instead of allowing any correction that would take place under normal market conditions. These two policies make Canadian real estate a very attractive investment — for both foreign and domestic buyers. But saying that foreigners are wholly responsible for creating a housing bubble is nothing more than fear-mongering, with people who don’t look or sound like us, being cast as the boogeyman. After all, what’s wrong with foreign investment? Foreigners bring money into the country, which creates jobs and drums-up business here at home. Developers make money, construction companies hire employees and buy capital equipment, the rental supply increases and local businesses profit the whole way through. It’s a win-win for everybody. More... I'm glad he thinks overpriced empty houses with a layer of dust everywhere is a win-win for everyone. I personally don't see how such a thing creates jobs personally. To my knowledge, the Canadian economy is tanking. The only reason it is only seeing a slight dip is because of the housing bubble which is keeping the numbers afloat. When the bubble bursts, we'll finally see where the Canadian economy really sits - and it ain't pretty. We've got layoffs happening left and right. Even the Canadian government is shedding jobs like crazy. Every time a sawmill burns down, it's an excellent excuse to layoff hundreds of people and skip the country in the west. In Vancouver, even Starbucks shops are starting to close up shop and ship out. The sooner Canadians realize how much we are in a world of hurt, the sooner we know exactly who to blame (Harper) and the sooner we can vote the Conservatives out so we can finally get this country back on track - and maybe even restore some dignity on the international stage if we're lucky.