The US residential market is recovering briskly from very depressed levels while the Canadian housing market looks increasingly vulnerable, with record amounts of household sector debt.
It should be noted that Canadian household debt-to-income ratio has already surpassed US levels reached back in 2007, when Americas housing market peaked out.
The chart above shows the relative price trends between the two housing markets along with the relative performance of American banks versus Canadian ones. It appears that the secular downturn in American banks has ended. Canadian banks are set to underperform, especially if the Canadian housing weakens.