Many people have been scratching their heads lately trying to understand how it is that Canada’s average house price jumped more than 17 per cent during the worst economic crisis to hit the world in decades. On its face, it seems senseless.
There is an answer, but to get to it, you have to learn the same uncomfortable lesson that the head of Canada Mortgage and Housing Corp. (and some of us who write about economics) learned this year. And that lesson is that we are living in an illusion created by central bank money-printing and profligate government spending. If house prices seem detached from reality, it’s because they are.
