Neighbors to the north: Housing party may be over

A chill is emerging in the once-booming Canadian housing market, as Canadian lawmakers take steps to make sure their market isn’t headed for a crash as hard as the United States’ housing bust a few years ago.

“Signs are everywhere that Canada’s long run-up in house prices is over, hit by a combination of tighter mortgage lending rules and growing consumer reluctance to take on more debt,” Reuters reported.

“Sales of existing homes are down steeply, with condo sales hit especially hard, and some long-booming prices have started to fall. … Sales always slump as the real estate market heads into winter. The big question will be whether spring brings renewal or confirmation that the party is over.”

Sales of existing homes have fallen 15.1 percent in September compared to a year ago, according to the Canadian Real Estate Association. Large cities that have really seen prices boom the last few years, such as in Toronto, Vancouver, and Victoria, are seeing much slower sales activity.

Canadian households hold more debt than American households did prior to the housing crash in the United States. As such, the Canadian government has taken steps to tighten mortgage lending several times in the last few years, mostly geared at limiting the amount of debt buyers can take on.