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Author: tjscott0 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 8717  
Subject: Canadian Banks Date: 1/31/2013 10:30 AM
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http://www.aei-ideas.org/2013/01/does-candada-have-an-unstai...

Does Canada have an unsustainable housing bubble that might be about to burst? You would sure think so looking at the graph above, which compares monthly home prices in the US (measured by the Case-Shiller Composite-20 Index through November 2012) and home prices in Canada (measured by the Teranet National Bank House Price Index through December 2012) since 2000 (both indexes equal 100 in January 2000). US home prices doubled between 2000 and 2006, when the housing bubble started to burst, leading to a 30% correction in home prices by 2008. Home prices in Canada doubled between 2000 and 2010, and have increased by more than 10% over the last two years, and by 3% over the last year.

http://www.thedailybeast.com/articles/2013/01/15/is-canada-h...

So the mystery remains: why no bubble in Canada? Why no banking crisis? My best working theory was that their banking system was run by Canadians, who are a very sensible people.

The Canadian media have started asking the same questions. People are now openly arguing over whether there’s a bubble, though that argument hasn’t attracted much notice on this side of the border. Last summer, the finance minister put new mortgage rules into place in an attempt to engineer a slowdown. Sure enough, house prices are falling.


How this shakes out will matter a lot. It will tell us a lot about the causes of housing bubbles: are they rooted in poor bank regulation, or other fundamentals?


Now back to the first link:
So there’s a great experiment underway in Canada’s real estate market

As Megan points out, Canada’s sound and stable financial, mortgage, and banking systems were relatively unaffected by all of the major financial and banking crises over the last 100 years that devastated the US. While our historically fragile banking system lead to 9,000 bank failures during the Great Depression, about 3,000 bank failures during the S&L crisis, and 427 bank failures from 2008-2011 from the “Great Recession,” Canada experienced almost no bank failures during any of those financial and banking crises.
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Now I don't know if there is a housing bubble in Canada. Or if there is a bubble, whether there will be a crash & burn. It does appear though that Canadian banks will survive without any bailout needed.

These links do generate an idea that Canadian banks will be a good investment for those desiring dividend stocks with increasing dividends.

It appears that the Canadian banking industry is concentrated with 5 large banks[TD, BMO, RY,BNS, CM]. They have dividend yields of 3.6% to 4.5%. Their have paid dividends for 10 to 18 years. There does appear to be a hic up in 2009 when they lowered dividends roughly 20%. But they have continue increasing dividends since then. I assume Canada was affected the US 2008 recession.Though it appears to have been less severe than in the US.

I will be investigating these banks closer to determine if they are worth of my investment dollars.
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