Canadian Housing Bubble Could Hit The Canadian Dollar ETF (FXC)
Canadians have been blessed with a relatively strong mortgage industry and housing markets throughout the U.S. credit crunch. Now there are signs that the dip is coming.
Home prices in Canada are booming along, leading central bankers and the Wall Street Journal alike to fret about whether a steep correction — maybe 25% or so — could be on the way.
The trigger could be something as simple as a new round of idle plants across the border from Detroit, where many car parts are made and much of the Canadian industrial sector is still centered.
Job losses in Ontario are already a topic of concern for Canadian commentators and could be the trigger that hits the housing market.
As it is, Canadian mortgage debt levels — usually considered extremely conservative, with the 30-year loan almost unheard of until recently — are now above their U.S. counterparts.
That is correct: Canadians now owe more on their homes than their southern cousins.
The Canadian dollar hit an all-time high against the greenback back in 2007, but is still universally loved. That love could be tested if the currently robust northern economy shows any signs of coming off the wheels.
In that event, CAD could be in play, which may give the CurrencyShares Canadian Dollar ETF (NYSE:FXC) a bit of volatility down the road.
Emerging Money provides insightful and timely information about the increasingly important world of Emerging Market investments. CNBC Emerging Markets Contributor Tim Seymour leads the team of Emerging Money to bring you cutting edge global news and analysis.
About Tim Seymour: Tim is a founder of Emerging Money. He is a founder and Managing Partner at Seygem Asset Management, and The Emerging Markets Contributor to CNBC. Seygem Asset Management focuses on investing throughout the global emerging markets asset class. With a view that emerging and developing economies will continue to outpace the economic growth and advancement of developed economies, Seymour has devoted a career to investing in the dominant markets of tomorrow, today. Seymour’s career has included significant experience in both alternative asset management (hedge funds) and capital markets, having launched two hedge funds, and built the largest Russian broker dealer in the USA. Seymour started his career at UBS, focusing on international credit (cash, swaps, forex) in a specialized hedge fund group (New York). Seymour completed the firm’s training program after graduating with an MBA in international finance from Fordham University. Seymour received his undergraduate degree at Georgetown University.