Canada's housing market is inflated but not a bubble - the fundamentals of supply and demand are still firmly in place in Canada's largest cities (ie population growth is FAR exceeding infrastructure).

Canada's housing market will see a roll back in pricing (lets say at an extreeme 20-30%) however that really is only pushing pricing back 1-2 years max (possibly not even that).

A few thoughts:

Prior to the 2008 crash, the US' "fundamentals of supply and demand" were still firmly in place as well. It's just that demand was massively juiced by easy money and an expectation that "housing only goes up" (speculation).

Clearly not all of Canada is in a bubble (Toronto, but even more, Vancouver, has always been expensive), but when a house in Brampton, Ontario (50 km from downtown Toronto, 45 to 75 minute commute with traffic) goes from $890,000 to $2.2M in 20 months, that's speculation.

When in Barrie, Ontario (2hr commute, 120 km away) you'd be hard pressed to find a home for under $1M, that makes zero sense.

And when small town BC (<20,000 population) has houses worth $1M but no industry or well paying jobs, that's a bubble.

Those numbers are more inflated than the peak 2007 bubble in the US, despite lower incomes in Canada. Houses in Las Vegas were bubblicious when they hit $500-$600k, let alone $2M.

I agree that major urban cores like Toronto and Vancouver might only see a 20-30% correction (just like San Francisco and New York in 2008), but other places are in for a world of hurt (similar to Las Vegas (-66%, https://fred.stlouisfed.org/series/LVXRNSA) or Miami (-55%, https://fred.stlouisfed.org/graph/?g=8hD)).

And unlike the US, many mortgages are recourse mortgages - you don't just walk away, you're on the hook for the full mortgage if after selling, the proceeds doesn't cover the debt. Plus Canadians can't lock in interest rates (and monthly payments as well) for 30 years like Americans - so less ability to just "ride it out until prices come back".

Canadians have much more risk exposure when home prices drop than Americans.

See in the case of Brampton (and to a lesser extent Barrie) they are actually considered essentially suburbs of Toronto. Someone commuting from Brampton is a regular everyday occurrence that no one would bat an eyelid at here, Barrie is less common but still happens all the time (it's a 90 minute commute via train).

The places where people are really going to take a hit in Canada is in places like the Maritimes or smaller cities much further away from the major metros that people fled to during the pandemic and WFH being the fad. Tons of folks sold their Toronto / Vancouver homes and bought homes in these area's for essentially cash and are mortgage free but they drove the prices way up and anyone native to those places who bought a house and had to use a mortgage are going to be in a world of hurt when those prices fall back down hard over the next 2-5 years.

I don't think we broadly disagree, and sure Brampton is a Toronto commuter 'burb, but a 2.5x increase in housing prices in 20 months is based on sound economics at all. $1M houses? Sure. $2.5M? Even the bay area isn't that much and the jobs pay way more.