Homeowners comparing home sales figures from the United States and Canada cannot help being struck by the similar decline in July home sales. Yet, wary home owners concerned about their home equity need not be spooked by the marked similarity in the percentage change in July sales.
In a new report, Washington-based think tank, the Center for American Progress, points out that the more tightly-regulated Canadian mortgage banking system is a far different animal than its American counterpart that fuelled a housing boom and now sits atop the biggest U.S. housing bust since the Great Depression.
“Why is it,” asks Alex Pollock of the Center for American Progress, “that the United States suffered through such a painful housing bubble and bust in the last decade, while Canada did not?” “After all,” he notes, “the two countries enjoy relatively similar home ownership rates … are rich, advanced, stable, have sophisticated financial systems and pioneer histories, and stretch from Atlantic to Pacific.”
“The answer,” writes Mr. Pollack, is quite simply “that Canada did not become enthralled with the laissez faire ideology that dominated U.S. economic policy making in the 2000s, and thus did not allow major gaps in its regulation of housing finance to develop.”
