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RATE HIKE AHEAD! - CANADA’S BIG BANKS PUMPED UP THE HOUSING BUBBLE? — Who Pays When It Pops?

689 views · Published 2 April 2017 · 6:27 · Indexed 12 November 2026

Channel: Mike Martins · 2017 · News & Politics

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“Futures are being bought out. Children’s futures are being bought out. Grandkids’ futures are being bought out.”
— Mike Martins

Canada’s housing market continues to get more expensive, and now even some of the country’s biggest bankers are starting to sound concerned.
In this video, I’m looking at an article from March 2017 examining the role Canada’s major banks have played in the housing boom — and one part immediately jumped out at me: the argument that banks can earn enormous profits during a housing boom while taxpayers may ultimately carry some of the risk if things go badly.
That’s my question: if an ordinary person makes an investment and loses money, that person takes the loss. Why should a major financial institution be treated differently?
The article discusses Royal Bank of Canada and CEO Dave McKay, with RBC having just reported roughly $3 billion in quarterly profit. McKay had previously sounded relatively comfortable about Canadian housing, but by this point he was expressing concern about Toronto, where prices were increasing at an extraordinary rate.
And this is exactly what I’ve been talking about in my Trends in the Housing Market videos.
Vancouver introduced its 15% foreign-buyer tax in 2016, and I said we needed to watch where that capital went next. Toronto was already heating up, and Seattle was another market I was watching closely.
My bigger concern is what all of this means for ordinary Canadians.
If housing continues climbing much faster than wages, what happens to young Canadians trying to buy their first home? What happens to families? What happens to our children and grandchildren when the cost of putting a roof over their heads becomes disconnected from what local people actually earn?
I eventually left Vancouver myself and moved to Merritt because I wanted to own a home, put down roots, raise my family and become part of a community. That's what housing means to me.
We've already seen what happened in the United States during the 2007–2008 housing crisis. When financial systems become dependent on ever-rising asset prices, eventually somebody is left holding the bag.
So what happens if Canada's housing boom finally turns?
And the bigger question:
Who takes the loss — the banks, investors, homeowners, or taxpayers?
Let me know what you think in the comments.

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