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Most Canadians should be keenly aware of the incredible and gravity-defying increase in real-estate values in Canadian metropolitan areas over the past 20 years.

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Calgary says it has the highest concentration of millionaires in the country and they are transforming Canada’s fourth largest city into a





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Homeowners in Vancouver and Toronto, in particular, have celebrated as their residences have increased in price by more than 100% in many neighbourhoods. This represents an enormous gain on the equity value they have in their houses, since many have taken advantage of low interest rates, high loan-to-value mortgages and seemingly infinite amortization periods.

Much of the coverage of urban housing has focused on whether there is a Canadian housing bubble and whether and when it will burst. The experience of the U.S. housing crash in 2007/08 — also the result of dramatically increasing home values coupled with the availability of cheap high-loan-to-value debt — serves as a cautionary tale of what inevitably follows in the wake of irrational exuberance in the pricing of any asset class.