Last week Congress passed a bill that will extend the closing deadline for the homebuyer tax credit to September 30. The President is expected to sign it on Tuesday. That will help the approximately 200,000 buyers caught in a backlog that threatened to breach the original June 30 deadline, but it will do nothing for the housing market going forward.

Now, of course, the tax credit boosted activity, and cleared some inventory off the market. But there is still an overhang of foreclosures waiting to crowd the already littered market. And the housing market will be hard pressed to withstand the pressures of another decline in the absence of government stimulus.

And the bad news: New home sales fell 33% in May. And pending home sales fell 30%. Existing home sales fell 2.2%...only because new home sales are calculated at the time of this reading will see some downside in the future (after the tax-credit closing deadline).

And the housing sector was one of the hardest hit in last week's employment situation report. June saw the loss of 22,000 construction jobs; that followed May's loss of 30,000.

Now, I extolled Canada recently in article comparing it to the U.S., and with this topic it begs another mention. Canada has managed to come through the global crisis relatively unscathed (as the last G7 nation to enter a recession and the first to exit). That it experienced any slowdown was no fault of its own; as Benjamin Tal of CIBC aptly said, "This was not made in Canada, this was a made in the U.S. recession, and in many ways Canada was a second hand smoker here".

That's true. The crisis was made in America...and Canada had no choice but to import it. But Canada's financial system didn't allow for a crisis like we have seen.

First of all, at the height of the housing bubble, 5% of Canadian mortgages were considered subprime. And in the U.S: over 30%. And the Canadian mortgage market is fairly condensed: the six largest Canadian banks own most of the mortgage market. And those banks hold almost 75% of loans on their books, rather than securitizing and selling them like U.S. banks, according to CNBC.

And that's not all: Canadian banks carry recourse loans, meaning they can seize a borrowers assets in the event of a foreclosure. That's a stark contrast to the troubling trend in the U.S., as banks work through a continuum of foreclosures that leave them saddled with underwater properties. And what's more, 80% of mortgages in Canada carry insurance.

Fittingly, Canada was the host of the recent G20 summit, where leaders met to discuss the global crisis and deficit reductions (Canada has the lowest debt-to-GDP ratio of the G7). And last Friday, the Bank of Canada reported that Canadians are more optimistic about the future, according to the Consumer Outlook Index. Well, they have reason to be.