Thoughts from 2007—just six months before the catastrophic 2008 housing crash—this post reflects on early warnings about the U.S. housing bubble. It’s a fascinating time capsule of how signs were visible, but many failed to act. Fast forward to 2025, and Canada’s housing market still feels frothy, with affordability at historic lows. While the U.S. saw a severe correction, Canada’s bubble never quite popped—raising the question: are we still living on borrowed time? Maybe?
Some new thoughts at the end.
So I like this graph because it explains why folks in the U.S. are so worried about the housing bubble, given how housing prices have increased so out of proportion from what they have been historically. Exciting stuff.
What Folks don’t know about the housing bubble:
Real Estate lampreys and finance industry bottom-feeders often joke about "the bubble". They say, “a housing bubble only exists when prices fall”. This is because as long as prices go up, nobody calls it a bubble. It’s a jab at the media, speculators, and even economists who get cold feet only after a correction starts. The media plays a big role in this "pump and dump" tom-foolery.
Another good one: “Real estate never goes down—except when it does”. It’s a sh*tty nod to ridiculously optimistic market predictions. This is especially true in Canada. The housing market here has defied gravity for years.
Insiders also chuckle about the “buy now or be priced out forever” myth—this is used as a pressure tactic. While it is sometimes true short-term, many regret ignoring fundamentals like debt-to-income ratios, which do matter.
Funny no one talks about being House Poor any more?
For context:
Better Dwelling: Canada’s Real Estate Bubble
You Think you Know?
1. Housing bubbles can stretch for decades:
Most people assume bubbles burst quickly. In Canada, the bubble has seemingly “plateaued” at crazy prices rather than crashing. From 2000 to 2025, home prices in cities like Toronto and Vancouver have climbed 300–400%. Yet no dramatic correction ever came. This prolonged inflation of housing values shocks economists and would-be buyers alike.
2. Even corrections don’t fix affordability:
Interest rate hikes in 2022–2023 slightly cooled prices. However, increased borrowing costs made monthly payments just as painful. So even with a price dip, affordability didn’t improve. This often surprises people who assume lower prices mean better buying conditions.
3. Many “owners” don’t own their homes outright.
A significant number of people in Canada are re-borrowing against inflated equity. This is due to high HELOC (Home Equity Line of Credit) usage. This can worsen downturns, as declining values and high leverage are a dangerous mix. Live now, pay later? Only boomers own their houses, and now the financial bottom-feeders want them to use Reverse Mortgages? Whats the forecast, Kenneth?
4. A “crash” doesn't always mean 50% price drops:
In Canada, a 10–15% correction would be called a crash. Yet, prices still stay far out of reach for average folks. The shock is that even a crash will not restore balance.
Some more info:
Bank of Canada - Real Estate Vulnerabilities (2019)
Housing Bubble Epilogue 2025
Housing bubble? When did we ever get out of the housing bubble? In Canada, the housing bubble only deflated a little with the raising of interest rates. However, there are already screams to lower them.
Thanks!
Not to this extent, maybe in Alberta but that is a function of the oil fields, not the shinanigans with under-rate mortgages like in the states (in Canada , I think that can’t happen).
–C8j
Is Canada similar?