WATCH: Hilliard MacBeth, financial adviser and author, joins consumer affairs reporter Jamie Sturgeon to discuss why he believes the Canadian real estate market is poised for a crash.
Financial adviser and author Hilliard MacBeth believes Canadian home prices sit on the precipice of their biggest crash ever.
Puffed up by years of ultra-low borrowing rates, home values have bloated to levels so far out of sync with the underlying incomes needed to support them, it’s only a matter of time before one headwind or another blows over the house of cards.
His new book, When the Bubble Bursts, was released this month across the country, and is one of the most fulsome looks yet at the current state of Canada’s much-fretted over real estate market. His call is that Canadian real estate is poised for a painful 40 to 50 per cent drop in value when the bubble pops.
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MacBeth, a portfolio manager for Richardson GMP in Edmonton, sat down with Global News to lay out his case for why believes the housing market is grossly overvalued, and where homeowners go from here:
How did we get here – who or what caused this “bubble”?
MORE: Sturdy as a house of cards? A look at Canada’s property boom
Are ultra-low interest rates inflating prices?
Many say strong immigration numbers are supporting growth. Your take?
What could cause the Canadian bubble to burst?
With oil prices crashing, is Canada headed toward a recession?
“We’ve had recessions in Canada every four or five years since the Second World War. And it’s been over five years since we’ve had one.”
What’s the book’s advice for homeowners or buyers?
“Everybody’s situation is different. But anyone who’s highly leveraged to real estate, I would encourage them to sell. It’s not going to be fun for them. Older people like myself, who have their mortgage paid down or off … it’s important to diversify away from those sectors that are tied to housing, if the housing bubble bursts.”
This interview has been condensed and edited for clarity.