The High Oil Prices Will Sink Us

The housing market in Toronto and other parts of Canada are as hot as any other in North America. The author argues that high energy prices might eventually help deflate the bubble. Personally, I bet the catalyst for the property bust will involve some sort of unwarranted government intervention in either the real estate market directly or other markets indirectly. A number of congress people on both sides of the aisle have been clamoring for trade protections against China and I can imagine a situation where the Chinese seek some sort of retribution and end up destabilizing currency and/or credit markets.

“YOU DON'T have to be a rocket scientist to figure it out:

Sooner or later these gouging world oil prices -- which hit a record high of over $61 US a barrel yesterday -- will kill off the consumer, and global economies will fall.
In fact, this could be the trigger to burst a real estate bubble in many parts of the world, where overly indebted consumers have kept the house of cards from caving in by borrowing heavily against rising home equity with interest-only loans.

But for now there's no end in sight to an explosive real estate market, especially here in Toronto, where condos are going up everywhere and June crunched in as the second-best ever for the Toronto Real Estate Board.

In total, an amazing 9,153 homes sold in the GTA last month -- down 1% from the best June ever last year, when 9,275 homes sold. “

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