With nearly 100,000 condos under construction or in the pre-construction phase, Toronto, the largest city in Canada, with a population equal to that of Phoenix, looks vulnerable.
What is not discussed is the upturn in Canadian bond yields. This means one thing - higher mortgage interest rates are coming soon.
Unlike the United States and Europe, Canada has yet to experience a housing crash.
Yet all the elements for such an event are in place.
All that is needed is a trigger event, a catalyst for the calamity.
Will it be a rise in unemployment rates?
A rise in interest rates?
Or a fall in commodity prices in a nation so export dependant?
My view is the last two events will be the trigger, with a fall in oil prices particularly pricking the bubble.
It is no coincidence that six of Canada's largest banks have just been declared "systemically important".
While the media has not considered the significance of this little phrase, we are acutely aware of its malignant meaning.
This means the big six banks in Canada have been approved for the now infamous Cyprus style "bail-in" rescue by depositors.
Anyone with more that $100,000 in any of these institutions should be aware that this is the limit of the Canadian Deposit Insurance Corporation's coverage.
If you are retired, and have $500,000 in one of these banks, $400,000 of it is potentially subject to confiscation to recapitalize the bank should it get into trouble over bad loans.
My thoughts are:
Spread your risk.
Keep funds in several institutions or even outside of institutions.
Consider precious metals that are physically owned.
The financial crisis is far from being resolved. And from the examples we've seen so far, governments are unwilling to stand behind your deposits for very long.
The largest change in the past 100 years is taking place in the monetary system, and there will be some rough patches ahead for those who trust in governments to take care of them.
Note: This is not my graphic. I would like to give credit to its producer, however, have been unable to locate the original source.