Vancouver housing bubble: Will it burst or just deflate?

A blog posting by Vancouver Home Mortgage :

With the Bank of Canada raising interest rates and Canadian Banks offering more attractive saving rates to consumers, investors will be tempted to move their real estate investments to safer savings account and GIC investments.

The Bank of Nova Scotia is advertising a 4.85%* on a 24-month GIC. The offer is only available until August 04. There are minimum deposit of $1,000 required and the GIC is non-redeemable.

ICICI Bank offers a more flexible deal, offering 4.5% on C$ deposits and 5.0% on US$ deposits on the bank’s HiSAVE Savings Account. There is no minimum deposit required and interest is calculated the daily balance and paid monthly!

The Canadian housing market is faced with:

* Rising Interest Rates
* Severe affordability problem
* Rising dollar impacting the manufacturing and resource sectors
* Softening in oil and gas prices
* Increasing new and resale home inventory
* Distinct possibility of US recession

These are negative forces that could topple the unrealistic real estate markets in Greater Vancouver, Fraser Valley of BC, Calgary and Edmonton.

What are your thoughts?