Thanks to Pacifica Partners Inc. we have an update on their chart series showing that Canadians have hit a heavy ceiling of debt acquisition.
If new borrowers don't show up then it's doubtful that cash buyers will bid up prices. Cash wants a high yield to offset the term risk of holding real estate in an expense laden environment.
We (Pacifica Partners Inc.) remain bearish on the Canadian real estate market with real estate appearing overvalued by approximately 30% in most major markets. Canadian economic weakness, the expected contraction of outstanding consumer credit, and already heightened real estate prices serve as the basis for our bearish stance.