Canada’s housing market headed for a crash, say many – yet it’s a great place to retire

Everyone is saying the Canadian housing market is in real trouble – a market riding a bubble bound to burst. And yet, the US press has named Canada a top retirement spot.

The housing market’s growth lately has defied all reason. An average detached home in Toronto has been growing in value by $8,500 per month, according to a Huffington Post report. In markets like Toronto and Vancouver, price growth has hit double digits over the past year.

But many warn that the good times aren’t going to roll on much longer. The Economist ranked Canada’s housing market as the most overvalued among three dozen advanced economies, blaming “the cheapness of borrowing” for driving up prices. Deutsche Bank has also said Canada’s housing market was the most overvalued in the world.

Meanwhile, international investors are betting against the Canadian housing market, according to the Huffington Post. Investors are taking short positions on Canadian companies involved in mortgage lending, betting on those companies’ stocks to fall. In fact, the most shorted stock in Canada is Home Capital Group, one of the country’s top mortgage lenders, according to a recent CNBC report.

And yet the Huffington Post labels Canada as a top spot for “luxury retirement” for Americans looking to relocate in their golden years. Say what?

According to HuffPo, it all comes down to the relative strength of the American dollar. Right now the U.S. dollar is 32% stronger versus the Canadian dollar than it was in 2010. The strength of the U.S. dollar versus the Canadian dollar could even allow U.S. retirees to maintain dual residences, enjoying the high standard of living in provinces like Ontario and escaping down south to avoid the Canadian winter.

“I don't usually recommend following exchange rates as a method for choosing where to live or retire overseas or when to time the purchase of property in another country,” wrote HuffPo contributor Kathleen Peddicord. “However, currency discounts like the ones U.S. dollar holders are enjoying in key markets right now are too big and far-reaching to ignore.”

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