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Not Here? Housing Market Policy and the Risk of a Housing Bust

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Author Info

  • Jim MacGee

    (University of Western Ontario)

Abstract

Can a US-style housing bust happen in Canada? Recent swings in Canadian house prices have raised concerns about the possibility. To evaluate the likelihood of a US style housing market crash in Canada, this paper examines what caused the US housing boom and bust from 2000 to 2009. A decline in underwriting standards played an essential role in the US housing market boom and dramatic bust. While monetary policy was very similar in both countries from 2000 to 2008, housing markets (especially the subprime component) were structured and regulated differently in each. Canadian housing policies, which avoided the sharp decline in underwriting standards seen in the US, worked well in reducing the possibility of a housing bust in Canada during 2008-2009, and continue to mitigate the risk of a massive wave of defaults in the future.

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File URL: http://www.cdhowe.org/pdf/ebrief_105.pdf
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Bibliographic Info

Paper provided by C.D. Howe Institute in its series e-briefs with number 105.

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Length: 5 pages
Date of creation: Aug 2010
Date of revision:
Publication status: Published on the C.D. Howe Institute website, August 2010
Handle: RePEc:cdh:ebrief:105

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Related research

Keywords: Financial Services; housing bust; real estate; Canadian housing policies; US-style housing bust;

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  1. Martin Gervais & Manish Pandey, 2008. "Who Cares About Mortgage Interest Deductibility?," Canadian Public Policy, University of Toronto Press, vol. 34(1), pages 1-24, March.
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Cited by:
  1. James MacGee, 2012. "The Rise in Consumer Credit and Bankruptcy: Cause for Concern?," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 346, April.

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