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If there's one TV genre in which Canadian content rules are redundant, it's the home renovation category. Canadian shows are so dominant that the U.S. HGTV network would be reduced to running endless House Hunters reruns without its popular northern imports. And that would upset Hillary Clinton; Love It or List It is her favourite program.

Still, Finance Minister Jim Flaherty should investigate whether all these taxpayer-supported reno shows have fuelled Canada's lofty house prices. If so, he might have to send the Property Brothers into exile. He and Bank of Canada Governor Mark Carney have tried almost everything else to tame Canadians' obsession with buying homes. Now, another mortgage "rate war" threatens to undo their hard work, as "bubble fatigue" sends consumers on a springtime buying spree.

Housing prices are ultimately a function of income and population growth. After a 15-year run – a marathon by historical standards – prices in Canada are out of whack with both of these fundamentals. The Economist thinks Canadian housing is overvalued by a third relative to income. The Fitch ratings agency pegs the overvaluation at 20 per cent.

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To be sure, Mr. Carney no longer sounds as worried about a housing bubble as he did last year. On Wednesday, he indicated that repeated warnings by him and Mr. Flaherty may be scaring Canadians straight, curbing their appetite for debt. But both men are up against history. When property prices get this frothy, pendulum swings are more likely than soft landings.

Such is the pickle in which Mr. Flaherty and Mr. Carney (at least until the latter's departure for the Bank of England) find themselves. Their risky experiment in guiding Canada through the recession by stoking housing demand is threatening to come undone. Household debt (largely the result of ever bigger mortgages) remains much higher in Canada than it was in the U.S. just before the 2008 crash. It wouldn't take much to turn a vulnerability into a calamity.

But even as Mr. Carney predicts a salutary stabilization of household debt levels this year, he knows that only creates other problems for him. If house-crazy consumers go into hibernation, where will economic growth come from?

Even a mild retrenchment in housing would expose Canada's recent overreliance on consumer debt-fuelled expansion. And it would leave the Canadian economy with little to run on, as the only other recent driver of growth hits a soft patch. Investment in the mining sector (including the oil industry) is expected to decline by 2.7 per cent this year, while what the central bank calls "ongoing competitiveness challenges" depresses manufacturing exports.

None of this would be nearly as threatening had it not been for fundamental policy errors made in 2006, when the previously staid Canada Mortgage and Housing Corp., the Crown-owned mortgage insurer, underwent an extreme makeover. U.S.-style no-down-payment mortgages, 40-year amortization periods and other supply-side "innovations" were introduced. With low interest rates, the new rules slashed the cost of carrying a mortgage. Any 25-year-old with two pay stubs could enter a bidding war on a downtown condo with all the upgrades.

After the 2008 U.S. crash, Ottawa ordered CMHC to tighten the mortgage rules somewhat. But, desperate for growth, it continued to encourage house hunters. CMHC bought $125-billion worth of mortgages from the banks, providing them with liquidity to dole out even more home loans. It was an understandable move, given the crisis. But it did not end there.

After that, CMHC dramatically grew its portfolio of so-called high-ratio insurance, covering homebuyers who make a down payment of less than 20 per cent. What's more, it more than doubled – to $238-billion – the amount of insurance that banks have voluntarily purchased to cover their other mortgages. Fears of a bubble are undoubtedly one reason banks have sought the added protection.

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CMHC now has $575-billion worth of mortgage insurance in force, a 67-per-cent increase since 2007. Ottawa further tightened mortgage rules last year. But the fact remains that even a mild economic shock would trigger rising defaults, leaving Mr. Carney's successor to pick up the pieces.

Let's hope it won't come to that. Let's hope that, unlike Federal Reserve chairman Ben Bernanke – who, in mid-2007, predicted that the U.S. housing market would "stabilize" – Mr. Carney won't have to eat his words. And we can all go back to watching Love It or List It without worrying.

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