Two Canadian think tanks have offered radically different views on the state of the Canadian housing industry. On August 31, the right-leaning C.D. Howe Institute released a paper by University of Western Ontario economist Jim MacGee downplaying the possibility of a U.S.–style housing crash occurring in Canada.

MacGee argues that the U.S. and Canadian housing markets were “structured and regulated somewhat differently” between 2000 and 2008. “Unlike in the US, the Canadian subprime market never expanded significantly into newer products, such as interest-only or negative-amortization mortgages, whose popularity grew rapidly in the US from 2003 to 2006,” he writes. “Moreover, while subprime lending increased rapidly in both countries over 2000 to 2006, the Canadian subprime market remains much smaller than in the US, as subprime lenders accounted for roughly 5 percent of mortgage originations in 2006—compared to 22 percent in the US.”

So-called ninja (no income, no job, or assets) loans led to climbing mortgage delinquencies in the U.S. before the recession. MacGee notes that in Canada, mortgage delinquencies didn’t start rising until after the onset of the economic slowdown. There was not a large increase in delinquencies even when housing prices fell between August 2008 and April 2009.

On the same day that the C.D. Howe Institute paper was released, the left-leaning Canadian Centre for Policy Alternatives issued a report by David Macdonald suggesting that there is a housing bubble that’s ready to burst. It highlighted the growing gap between housing prices and household incomes, inflation, and economic growth.

“Rising interest rates, particularly rising mortgage rates, will likely be the main drivers behind housing prices in the immediate future, and mortgage rates have nowhere to go but up,” Macdonald writes.

He suggests that if these rate increases can be kept “manageable” and if mortgage eligibility can be “reset closer to their historic 25-year amortization”, then housing prices may decline in a controlled way.