Canada is sitting on one of the largest housing bubbles 'of all time,' an analyst says. What happens if it bursts?

An analyst who describes Canada as sitting on one of 'the largest housing bubbles of all time' warns that if it bursts, the country could be thrown into a deeper recession than forecasted.

An analyst who describes Canada as sitting on one of "the largest housing bubbles of all time" warns that if it bursts, the country could be thrown into a deeper recession than forecasted.

"I wouldn't necessarily say it's imminent," Phillip Colmar, partner at Global Strategist at MRB Partners, told CTV News Channel. "I would say it's pretty inevitable."

But what's put Canada's housing market at such high risk of unravelling? Colmar explained the brewing crisis "underneath the surface" and offered his key takeaways to Todd van der Heyden in a one-on-one interview on Tuesday.

HOUSE PRICES TO RELATIVE INCOME

Colmar argues that those looking for a "big headline about a housing bubble" should be keeping an eye on the disparity between house prices and incomes.

He warns that decades of low interest rates in Canada "seduced a lot of home buyers" and has led to "excessive leverage backing up the whole system."

But how leveraged are Canadian homeowners? Colmar says it's significantly "north of where the U.S. was" before the 2008 housing market crash.