The surprisingly strong surge in housing starts, to 244,900 annualised in April, is yet another sign that Canada's housing market is dangerously overheating. Admittedly, starts have only recovered to the levels seen in the mid-2000s. The crucial difference, however, is that the upturn in starts a decade ago made more sense given the relatively low level of unoccupied units. Starts are surging now even though the number of units already sitting empty is unusually high. The disconnect is far greatest in the condo market. Rising housing valuations, relaxed lending standards and historically low interest rates have fuelled this overconfident housing investment binge. Eventually this boom is going to turn to bust.
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