What if an overvalued housing market collapses in Canada or Australia?
An overvalued-housing crash (Canada/Australia/China) is a credit-and-rates risk-off: HY spreads widen, rate-sensitive Nasdaq/tech and crypto-beta sell, with the real-yield leg pressuring duration-heavy equities. Rhymes with China's 2021 Evergrande/Kaisa developer contagion and, structurally, the US 2007-08 mortgage bust. Transmission: domestic banks with mortgage concentration, then the currency and consumption. Forward angle: Canada/Australia run floating-rate, recourse mortgages with bank concentration - so the channel is bank-margin and consumer-deleveraging stress rather than a US-style securitized-credit blowup.
Every number ships with its receipt — the odds, the range, the precedents, and a public grade at Reality Check. The statistical machinery that produces it is proprietary.
The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (electric blue) over time vs the market's (Polymarket, amber), from the past toward the 1–3 years horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. A housing-price collapse hits an overvalued market (Canada/Australia/China). The trigger decomposes into signed root‑shocks — Credit spreads ▲ · Real yields ▲ · Risk appetite ▼ — which propagate through our causal graph to the markets below.