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The Canadian Housing Bubble Puts Even The US To Shame

Tyler Durden's picture




 

Since the bursting of the first US housing bubble in 2007, one of the primary explicit goals of the Fed has been to reflate the very same housing bubble (whose pop, together with the credit bubble, nearly wiped out the western financial system) as housing, far more than stocks, is instrumental to the "wealth effect" of the broader population (as opposed to just the 1%).

Sadly for the Fed, instead of recovering previous highs, median housing prices (not to be confused with the ultraluxury high end where prices have never been higher) have stagnated and are now in the downward phase of the fourth consecutive dead cat bounce, curiously matching a like amount of Fed monetary injection episodes.

But while the Fed has clearly had a problem with reflating the broader housing bubble, one which would impact the middle class instead of just those who are already wealthier than ever before thanks to the Russel 200,000, one place which not only never suffered a housing bubble pop in the 2006-2008 years, but never looked back as it continued its diagonal 'bottom left to top right' trajectory is Canada. As the chart below shows, the Canadian housing bubble has put all attempts at listening to Krugman and reflating yet another bubble to shame.

Here is the Globe and Mail's take:

The gap between the average price of a home in Canada and the United States widened to a record level in the first quarter of this year, contrary to what economists would have expected, according to Bank of Montreal’s chief economist Doug Porter.

 

Average Canadian home prices were 66 per cent above average U.S. prices during the first three months of this year, he says. (Note: these are prices for existing houses and condos, not those that are newly constructed).

 

“The main takeaway is that, contrary to all expectations, the Canadian housing market has just kept on rolling in 2014 even as the U.S. housing market has  paused for breath (after a steep climb out of the dungeon),” he writes in a research note. “Put it this way, how many pundits a year ago were calling for Canadian home prices to rise faster than their U.S. counterparts in any single measure?”

 

It's worth noting that there are many problems with comparing average Canadian home prices to average U.S. home prices, not the least of which is that average prices themselves can be highly misleading. Mr. Porter is aware that it’s not an apples-to-apples comparison.

 

“Some may quibble that this doesn’t take the exchange rate into account, but even adjusting for the Canadian dollar leaves a 50 per cent price gap,” he writes.

So if indeed the Fed is intent on reflating the housing bubble for all, not just for some, perhaps it is time to take a look at what the northern neighbor is doing and do the same.  Of course, the question remains how much more "up and to the right" movement is left in Canadian home prices, where the Chinese and Russian oligarch bid is, according to some, an even greater factor in setting marginal prices than in the US and Hong Kong.

 

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Sun, 04/27/2014 - 17:35 | 4701921 knukles
knukles's picture

Well thank God that the Nazis won't bomb Pearl Harbor again on Halloween so there's no reason to think the apple cart will get upset, eh?

Sun, 04/27/2014 - 17:41 | 4701936 Deathrips
Deathrips's picture

With all that personal debt, US imports drying up, and sickening socialism its going down, Eh?

 

From your friendly nieghbor...who knows canadian mortgages are full recourse.

 

Welcome to the party ...bitchez!

 

RIPS

Sun, 04/27/2014 - 17:44 | 4701943 James_Cole
James_Cole's picture

To be fair to canada, much like Hong Kong there's a lack of land and high population density so one would expect a chart like this over time.

Oh, what's that? Canada is the size of russian and ten people live there? Hmm. Might be a problem. 

Sun, 04/27/2014 - 17:46 | 4701951 Soul Glow
Soul Glow's picture

Everything's fine, the Central Banks have it under control.

Sun, 04/27/2014 - 17:56 | 4701984 Bay of Pigs
Bay of Pigs's picture

Having seen the bubble grow first hand on Vancouver Island and watching the hordes of Canadians buying hand over fist (second homes) in places Kihei, Maui (over 70% of all condo and home sales last year alone), it is amazing so many appear to not "get it" in Canada. It is a massive bubble, and ready to pop.

Sun, 04/27/2014 - 18:09 | 4702024 fonestar
fonestar's picture

Canada is likely to see a great rotation from housing into Bitcoin.  After all, you can't eat a house.

Sun, 04/27/2014 - 18:29 | 4702073 DoChenRollingBearing
DoChenRollingBearing's picture

Can't eat BTC.  Nor gold (not really).

Rotation from housing to BTC is possible.  

 

Get at it, fonestar!

Sun, 04/27/2014 - 19:30 | 4702247 aVileRat
aVileRat's picture

Few problems with the short-Canada trade that may require a Bloomberg, a degree in Canadian real estate markets or some brain cells:

1. Canadian construction data does not seperate industrial construction workers from retail/homebuilder labour. May want to tap a few hedge funds on the shoulder to check the COAA/PDAC information and back out how many people are actually employed in the "housing bubble".

2. Canada as a country has a large area per capita, but most infrastructure is in hub clusters, like Russia. Thus, using the "overcapacity" ratio which made retail punters a bunch of cash on shorting the US/UK markets, forgets to account that many properties must be presold for credit syndicates to take the deal on the sheets.

3. Canadian loans do not have a subprime-like, tranche. The best they had as an analog was ABCP, which is now banned from marketing to general institutional consumers. Most of those loan classes do not have a current bid/main-board banks are restricted on generating those MBCP products for secondary offering.

4. Credit leverage and retail consumer credit in Canada. Google or seek legal opinon on how a NINJA is made and how it is impossible to make said loan in Canada retail finance law.

5. Quality of jobs and wage growth in Canada vs. India, Aus., USA, UK, EU. Protip: Do not double count the Quebec numbers and remember to remove the seasonal adjustment for SK/Ont. agri-workers.

6. Corporate leverage and ROA's of Canadian corporations without the use of buyback and tax gimmicks. Now compare that "clean" ROA to the "clean" ROA of the UK, EU, USA or other service led economy.

Or just ignore this post, most of the buy-side PM's who put on the short Canada trade last fall will soon be out of a job at those Tepper Award shops. Expect those long-UK/China PM's to start talking their book hard this summer before the 2015 redemption triggers kick in.

This being said: you would be a bigger fucking idiot to be buying any type of non-A+ debt going into June-2014 than those who went short natural gas/long U-236 this year.

(fuck my posts are growing wordy, stop making such thought provoking threads Tyler ;) ).

 

Sun, 04/27/2014 - 20:24 | 4702385 James_Cole
James_Cole's picture

Or just ignore this post, most of the buy-side PM's who put on the short Canada trade last fall will soon be out of a job at those Tepper Award shops. 

Yes, your points are mostly pretty weak. However, what is not so weak is the Canadian governments official policy of 'full retard'  

http://www.zerohedge.com/news/2013-12-23/former-goldman-banker-head-cmhc...

I see you were making a similar case over there..

Sun, 04/27/2014 - 21:33 | 4702580 ZerOhead
ZerOhead's picture

The Canadian government (it's citizens actually) is on the hook for $900 billion in both private and CMHC loan guarantees.

Home building and renovation is over 20% of Canadian GDP.

"He estimates that as much as 27 per cent of GDP can be linked to Canada’s housing market, a disproportionately large number compared to other countries, including the U.S. at its peak. “Take it away and that alone puts us into a recession, given where we are,” Rabidoux says."

http://www.macleans.ca/economy/business/crash-and-burn/

Yup... it's a bubble alright...

Mon, 04/28/2014 - 06:06 | 4703228 jaxville
jaxville's picture

 You forgot to mention that in April of 2004, Canada Mortgage and Housing Corporation made it legal for the banks to offer (insured)mortgages without the buyer having to bother with a down payment. The charter banks wrote a huge amount of mortgages to people who were previously unqualified. Some banks even offered a little extra for furniture or even a new car. Not mentioning any names like Royal or Bank of Nova Scotia .....

  A high proportion of those mortgages were delinquent by 2008 which exasperated liquidity issues then occuring. That is what led to Canadain banks getting the bailouts. CMHC took most of the non performing mortgages out of the banks balance sheets by exchanging them for gov't guaranteed paper. Even with this 400 billion+ facility in place, Canadian banks borrowed an additional 140 billion in cash from the Fed and others.

  Its a myth that Canadian banks are responsible when it comes to writing mortgages.

 

Mon, 04/28/2014 - 09:39 | 4703701 ZeroPower
ZeroPower's picture

Great post - of course, watch out for the doomsayers who have no notion of CAD RE markets and start making assumptions like you just mentioned above.

Sun, 04/27/2014 - 19:09 | 4702214 Stoploss
Stoploss's picture

Or shit a bitcoin...

Mon, 04/28/2014 - 00:39 | 4702977 0z
0z's picture

You're coming to your senses now.
Unless you werent being sarcastic.

Sun, 04/27/2014 - 18:56 | 4702175 U4 eee aaa
U4 eee aaa's picture

It's a boomer bubble. They are in their peak earning years

Sun, 04/27/2014 - 17:51 | 4701965 kaiserhoff
kaiserhoff's picture

Lack of land in Vancouver is no doubt an issue.  I remember reading years ago that land use and zoning were a big part of the difference.  I don't know if that's still an issue, but it looks like housing is way out of whack with replacement cost, as it is in many US areas.  Bells ringing at the top?

Sun, 04/27/2014 - 17:52 | 4701974 Carpenter1
Carpenter1's picture

"Lack of land" was an issue in LA too, didn't seem to matter. That's just the BS made up by the real estate industry.

Sun, 04/27/2014 - 18:33 | 4702102 pitz
pitz's picture

What "lack of land" in Vancouver?  Fly into YVR sometime with an approach from the East, there's huge amounts of farmland that can easily and readily be converted to housing. 

Sun, 04/27/2014 - 18:50 | 4702143 Lore
Lore's picture

Sorry, that land is protected Agricultural Land Reserve, for farming only. Thank the "urban containment boundary" of Agenda 21 for stringent law in that regard. I have friends who intended to subdivide and were ruined financially by changes when the new "green" commandments were ordained a few years ago. You can build homes up the sides of the mountains on the North Shore, but you cannot build on arable land zoned for agriculture.

The article is irresponsible for the lack of attention to the fact that Canada was never so free with mortgages as America was.  In Canada, a pulse was never enough: you still had to have a job and make a good down payment.  That eliminates a lot of scumbags. 

Chinese investment on the Left Coast is magnified beyond reason. You're talking maybe 30,000 investment homes in Vancouver, comprising a fraction of one percent of the market, so to "Blame the Chinese" is to have your ignorance exploited by progagandists.

Another point worth mentioning here is the bastardization of the word "affordiability." Blame those greentards I mentioned before. Every house is "affordable" to the extent that it has a price negotiated between buyer and seller.  Nowadays though, when you hear people bitch and whine about "affordability," it translates as "I'm-a-fucking-Marxist-and-want-you-to-build-subsidized-townhomes-for-me-and-my-family-of-socialist-parasites."

Sun, 04/27/2014 - 18:50 | 4702157 kaiserhoff
kaiserhoff's picture

and now we know.

Sun, 04/27/2014 - 18:56 | 4702178 pitz
pitz's picture

Agricultural Land Reserve is a bunch of nonsense, and will be repealed the moment the land is actually needed.  No politician can possibly resist the urge of all the tax revenue associated with development.  And we're talking about a tiny amount of land relatively speaking, used for residential populations, as opposed to farming. 

Mon, 04/28/2014 - 01:06 | 4703008 Seer
Seer's picture

Yup.  govt+developers...

I say let's just get on with the business of breeding and trashing lands, just like humans have done since the beginning.  All this other shit only delays the inevitible.

Mon, 04/28/2014 - 13:55 | 4704577 Lore
Lore's picture

Perceptive. ALR seems to be a vehicle for sweetheart deals between developers and whores in local government.

Sun, 04/27/2014 - 19:26 | 4702244 New World Chaos
New World Chaos's picture

The dynamic in Auckland is much like Vancouver.  Zoning, greens, Asian immigrants, a bit of escaping Chinese money, an impossible permit process, and a generally nice city (with nearby mountains and farmland) have combined to blow a monster bubble despite mortgage requirements being tight by Western standards.  The left deserves most of the blame.  The housing crisis could be fixed rather painlessly if they could think outside their bureaucratic fiefdoms and intellectual bubbles.  But they would rather blame evil rich speculators.  Of course, the solution is more central planning, more housing projects, and higher taxes.  They will solve the housing crisis by turning Auckland into a city where nobody wants to live.

Sun, 04/27/2014 - 19:40 | 4702264 DoChenRollingBearing
DoChenRollingBearing's picture

Thank you for the interesting report from NZ.

Sun, 04/27/2014 - 20:18 | 4702367 New World Chaos
New World Chaos's picture

No worries, mate.

If you're interested, the South Island outside of Christchurch and Queenstown hasn't been affected that much.  Things are still more expensive than in Peru, but people would be less likely to turn on you in a real SHTF scenario.  The South Island is much better than the North Island as far as SHTF scenarios go.  Lower population density, more farmers, more people who think like us, less drug and gang problems (NZ's underbelly is seamier than America's).

Mon, 04/28/2014 - 07:09 | 4703314 Dr. Bonzo
Dr. Bonzo's picture

  NZ's underbelly is seamier than America's.

LMFAO. Good one.

Mon, 04/28/2014 - 01:08 | 4703009 Seer
Seer's picture

"The housing crisis could be fixed rather painlessly if they could think outside their bureaucratic fiefdoms and intellectual bubbles. "

Don't leave us hanging here, I'm waiting for the "solution"...

Sun, 04/27/2014 - 19:54 | 4702284 Jreb
Jreb's picture

Marxists in Vancouver? Surely you jest sir.... /sarc.

Sun, 04/27/2014 - 21:22 | 4702404 umdesch4
umdesch4's picture

Where did you get that 30,000 number from? I was sitting with a Re/max agent a couple weeks ago, and he was showing me something from one of their books. There's 10,000 condo units +/- 4% within a 1km radius of Coquitlam Centre that are labelled "Demographic: Asian Foreign Investment". You can't tell me the entire rest of the lower mainland outside that only accounts for double that. I stood in lines downtown on opening day for property sales just outside of Yaletown a few years back, and every day it was the same story. Asian investors throwing down bids on a dozen or two units at a time. Then there's the new developments happening along the Evergreen line. All those condos coming up around North Road @ Clarke? Sold, and local business owners you talk to around there just shake their heads and tell you that they don't expect much to come of it, as all those units are foreign investments that will be empty when the dust settles, just like much of the already established buildings in that area that only have a 40-50% occupancy rate.

Has anyone refuting all this actually been to any of these places and looked? Because I certainly have, and the official stats can say whatever they want...but the people who live here see it every day.

 

PS. I didn't downvote you...I'm just questioning that number is all.

Sun, 04/27/2014 - 21:50 | 4702625 Matt
Matt's picture

Are you sure any/many of the asians where foreign? 

Sun, 04/27/2014 - 23:11 | 4702835 umdesch4
umdesch4's picture

You mean in the condo bids downtown? I'm not sure, but it just "felt" that way. Young-ish asian guys in suits, with a briefcase, relaying everything going on in Mandarin (sometimes Cantonese) to somebody on the other end of a cell phone. I saw it at least 30 times in one week around late 2009 while I was helping a friend looking to buy a place around there. He never did get anything. The first handful of guys in line would buy up the entire place, every single time. It was comical, though disheartening to watch after a while. He ended up getting a place near Loughheed mall instead, before the Evergreen line turned that mess into the same thing. Just recently he sold, bought in PoCo instead. We have to get further and further out just to stay away from this craziness now. I'm even further out...my daily commute to work is total insanity.

Mon, 04/28/2014 - 14:29 | 4704729 Lore
Lore's picture

I was referring to the core body of property investment moguls. There are of course many, many more Chinese people living in Vancouver. Diane Francis did a piece about foreign investment in the Vancouver Sun a couple years back:

Taxpayers also victims of ‘hot money’ behind Canada’s condo bubbles (4-May-2012)

To tame Toronto’s housing ‘bubble’, ban foreign buying (13-Apr-2012)

I can't find the one that estimated the number of Chinese investors, and ZH won't let me go back far enough to where I posted it previously.

Tue, 04/29/2014 - 00:46 | 4706592 umdesch4
umdesch4's picture

Hey, thanks for the follow-up and links! Interesting reading in that tax scam aspect of it. I never heard much about that before...

Mon, 04/28/2014 - 01:12 | 4703015 Seer
Seer's picture

I wasn't involved in bidding, but I can concur that the picture you are painting is accurate.

I'm just dumbfounded that they could keep it up this long.

When China's growth really starts hitting the skids you'll find that the rental market up there starts to crumble, which then sets things reversing and the bubble blows.

Sun, 04/27/2014 - 18:48 | 4702150 kaiserhoff
kaiserhoff's picture

Thanks pitz.  Guess I've never flown in.  I just remember the mountains up against the highway.

So why hasn't that conversion happened?

Sun, 04/27/2014 - 19:06 | 4702204 pitz
pitz's picture

"

So why hasn't that conversion happened?"

 

No demand that can't be accomodated within the confines of existing supply.  Rents in Vancouver really aren't very high.  If there was scarcity, rents would be much higher.

Sun, 04/27/2014 - 18:53 | 4702166 U4 eee aaa
U4 eee aaa's picture

If you tear down a block of houses you can put up a 50 story high rise in their place. Just ask Hong Kong how that is done.

And if you don't think the developers will make that happen when the need arises, then I've got some Vancouver real estate to sell you.

There you go, fixed that land problem for you

Sun, 04/27/2014 - 19:17 | 4702224 ultimate warrior
ultimate warrior's picture

Kyle Bass talks about this in a presentation he just gave.

Tyler should make a post of this so more people see it. Lots of good information.

http://www.youtube.com/watch?v=VBPZ58dzjfE

Sun, 04/27/2014 - 17:55 | 4701968 Deathrips
Deathrips's picture

That's funny James.

I heard the same strong defense about Vancouver last week. Geographic limits and scarcity of options supposedly make it a raging bull cock market. I had a short conversation about affordability and interest rates. I also heard some crap about the CAD rising in value against the USD because they dont print? LOL.

I shrug.

But its got an urban rail...he says?

 

Whats canadian for debtors prison?

 

RIPS

Sun, 04/27/2014 - 18:04 | 4702008 Spitzer
Spitzer's picture

Property taxes are going mental in Canada too. I wonder if there is a chart ti compare..

Sun, 04/27/2014 - 18:28 | 4702082 DoChenRollingBearing
DoChenRollingBearing's picture

 

 

+ 1  

Property taxes are a big drawback (and potentially a big risk) to being "All Inn" on real estate.

Mon, 04/28/2014 - 01:24 | 4703035 Seer
Seer's picture

Broad-brush caution...

I've got Ag land and it's taxed at a low rate (to keep the developers away- they were driving up property values to insane levels and country folks didn't want to leave their land and get stuck with higher taxes!- if it converts then they absorb a bit hit on taxes).  I have ZERO interest in selling.  It's my home.  I already did my "real estate speculation" on a "property" (that I'd lived in for 10 years).

Not pimping/pushing do this or do that, not selling "investment" ideas or pushing ideological views, just noting ways of looking at things, as some might be of use to others...

Sun, 04/27/2014 - 17:51 | 4701969 crazzziecanuck
crazzziecanuck's picture

Most places in Canada are not seeing explosion in real estate prices.  It's largely only occuring in three cities (which has about 20% of the national population).

In Toronto, you have an executive class that lives off the wealth extracted from the regions as the capital flows into Toronto and then out of the country.  So they are largely immune to economic reality.

The other city with massive explosions in prices is Vancouver, or as some of us call it Hongkouver and the need for Chinese nationals to drop assets in safe places.

Another city that has housing prices is Fort Macmurray, and that's pure supply and demand.

 

Sun, 04/27/2014 - 18:00 | 4701986 James_Cole
Mon, 04/28/2014 - 00:06 | 4702924 LoneuhRanger
LoneuhRanger's picture

Thanks for these charts.

Bought my house in Regina 2005 $134 K - prop taxes $1700 yr

Today city values my house at $290 K - prop taxes $2500 up 7% this yr. Utilities up 8%. City just started building a new $250 mil stadium, too. We are fucked.

Mon, 04/28/2014 - 01:16 | 4703022 AbbeBrel
AbbeBrel's picture

Yup thanks to google maps it was easy to find Regina - on a conventional map I think I would need to use a magnifying glass!!   Looks like the town fathers are well on their way to insuring that Regina-ites are "in the box" - renting their homes from the gubbermint and the banksters.   It is a great scheme and works until it doesn't.   Hope your wallet is strong enough to hold up your share of the stadium!!   

 

And what is the deal with the houses with pink roofs on the NE corner of the town??   The one with the pink roof *AND* pink front yard made me chuckle...

Mon, 04/28/2014 - 01:34 | 4703050 Seer
Seer's picture

"City just started building a new $250 mil stadium, too. We are fucked."

I fought one of those kinds of things in the last city I was in.  The "it's for the kids" propaganda won: managed to drag them into court, so got them to sweat at least.

It's all the classic symptoms of what went wrong every fucking where else.  Canadians seem to be pretty bull-headed.  I worry that the "natives" (ha ha- the British/white folks) will start taking it out on the non-natives (mostly Asians); it seems that the race tension is palatable.

Property taxes will eventually go down.  Of course, everything will be in shambles then... (I actually got to experience reduced property taxes w/o a major economic crash- I think it's a rare instance, but an instance nonetheless.)

Sun, 04/27/2014 - 18:08 | 4702001 Deathrips
Deathrips's picture

I was hearing something about the changing in visa process for the Chinese being about, "Now they have to do it the RIGHT way".

ITS Coming Wrong-couveran!

 

RIP

Sun, 04/27/2014 - 19:00 | 4702181 pitz
pitz's picture

Even Toronto, Vancouver, and Calgary are in the midst of declines over the past year.  Its like California circa 2007, where the high end kept selling, but the starter homes dropped off the map because the subprime credit dried up.

Sun, 04/27/2014 - 22:01 | 4702658 Matt
Matt's picture

Toronto is 17% of the population on its own, if you count the Greater Toronto Area (GTA). 

~6 Million in GTA: http://en.wikipedia.org/wiki/Greater_Toronto_Area

~ 35 million in Canada: http://en.wikipedia.org/wiki/Canada

I really don't understand why outlying areas vote to join huge central governments.

 

Mon, 04/28/2014 - 01:27 | 4703043 Seer
Seer's picture

"I really don't understand why outlying areas vote to join huge central governments."

Ah, one of life's great mysteries!

I suspect that the outlying areas start having difficulties with their services (perhaps do the area's tax rates and such) and the usual city-slicker crew comes along and makes a big pitch to some of the wealthier folks and pretty soon the campaign is on!

Sun, 04/27/2014 - 19:01 | 4702188 pitz
pitz's picture

BTW, it would be nice if the Chinese were actually bringing wealth to Vancouver ("Hongcouver"), but they're not.  The Chinese who do come to Canada are buying with minimal-down mortgages just like everyone else.  Debt is right off the charts.  Vancouver's non-RE economy is quite stagnant.

Sun, 04/27/2014 - 20:04 | 4702316 Jreb
Jreb's picture

Annecodatal but thought I would share.

Was at a dinner party - can't remember why - about a year ago. Something my wife dragged me to.

Was out on the deck talking to the guys in the cancer ward - one was a real etsate agent from Vancouver. I asked him how the market was. He said "fine I guess". I probed a bit further. I asked him about his thoughts on "the bubble." He smiles and fiddles with his coffin nail. Then he says to me "Let's put it this way Jreb - about 50% of people who have a mortgage in southern BC are leveraged to the hilt. This means that if interest rates move just a bit too much at least half of those retards won't be able to make their mortgage paments or pay their taxes. Everyone better hope that rates stay low cause if they move 2 or 3 percent a lot of people will go down and then the rest of us are fucked along with them. Other than that business is great."

I instantly liked the guy. I should have bought a house from him. He said he one in Kitsilano. I coulda gotten a great deal on an 800 square foot basment suite in a 70 year old house for only 850K. But my wife has no sense of adventure so once again I missed the opportunity of a life time. Oh well - what are you gonna do?

 

 

Mon, 04/28/2014 - 01:16 | 4703023 pitz
pitz's picture

"what are you gonna do"?  Pick up the pieces, of course, after those "50% of people who have a mortgage..." have to puke up the properties. 

Mon, 04/28/2014 - 01:26 | 4703041 AbbeBrel
AbbeBrel's picture

Thanks for the chuckle on the cheap "Basement Suite"!!   Oh and that re-calibrates my thinking that these Vanc deals were all cash - 

 

What you seem to be hinting is that (1) not only are the deals highly leveraged in many (most?) cases, but (2) the loans are interest floating loans.    And Full Recourse.   But Full Recourse may insure that the fall, when it happens, will result in a much sharper downturn as people, instead of walking away, will eat beans for 5 years while trying to pay off their stupidity tax.   Unless they simply change countries.    Or both...

Mon, 04/28/2014 - 01:37 | 4703058 Seer
Seer's picture

Lots of ARMs.  And lots of those mortgages are also dependent on several people's incomes (extended families, or as was the case with my wife- renting out rooms to students and such).  It's pretty rickety...

Mon, 04/28/2014 - 10:17 | 4703812 Jreb
Jreb's picture

"Rickety" is probably one of the better descriptions of the housing mrket here. When you compare household incomes to housing prices, mortgage types and rates and overall debt load it looks to me like it is all being held together with spit and string. An interest rate swing could ruin a lot of people and crush housing values in the process. I keep wondering if everyone has forgotten the 80's and 20% rates? Could never happen again though right?

Sun, 04/27/2014 - 19:38 | 4702259 Kirk2NCC1701
Kirk2NCC1701's picture

It's obvious why foreigners want to buy RE in Canada:  It does not have the trashy or ghetto neighbourhoods found in so many places in the US. 

Hell even my middle-schoolers see the obvious difference whenever we cross ANY border between the US and Canada: "Dad, you can really tell there's a difference when you enter Canada... the homes and yards are in much better shape, even the basic homes are kept nice and tidy."  In the US, by contrast, you have to live in upscale or walled-off neighborhoods to get something comparable or nicer.

Add to this the far lower crime rates, fresher air & water, far better education (Canada consistently ranks in the Top 5 in international academic competitions), and an education and health care that won't bankrupt you, then it's no frikkin wonder that it's favored by so many as a place to which to legally immigrate.  Thanks to the US and three oceans acting as barriers, Canada does not have the illegal immigration problem.  Plus Canada never had slavery, hence none of the fallout of slavery or slave culture.  Plus, when traveling abroad, Canadians don't exactly stand out as kidnapping targets.

When you add up all these factors -- not just the SINGLE VARIABLE that 'Mericans love to glom onto -- then it's easy to see why foreigners want to invest there or live there.

Sun, 04/27/2014 - 20:08 | 4702331 Jreb
Jreb's picture

SSSSHHHHHHHH!!!!!

Fuck man - what are you trying to do..... get us invaded?

Folks - this guy doesn't have a clue what he's talking about. Nothing in Canada but snow, hookers (or was that politicians?) that smell like cigarettes and rye and more snow. You'd be better off in Detroit. Honest.

Sun, 04/27/2014 - 22:50 | 4702780 Deathrips
Deathrips's picture

Shhh is right. They try to spin free man aginst free man.

 

Dont tell anyone.

 

RIPS

Sun, 04/27/2014 - 23:31 | 4702872 Jreb
Jreb's picture

Yep.

Mon, 04/28/2014 - 00:11 | 4702929 LoneuhRanger
LoneuhRanger's picture

I'm still stepping over 1.5 meter snow drifts to let the sled dogs out for a piss. It ain't good up here.

Mon, 04/28/2014 - 01:38 | 4703063 Seer
Seer's picture

Wife's nephew and family live in Alberta.  I think that their energy bills rival our mortage payment...

Sun, 04/27/2014 - 20:56 | 4702475 Toronto Kid
Toronto Kid's picture

*Plus Canada never had slavery, hence none of the fallout of slavery or slave culture.*

Were you dropped on your head as a child? Is that why you can't google 'slavery canada'?

Of course there were slaves in Canada, but it wasn't illegal until the mother country outlawed it. Governor Simcoe banned the importation of slaves, but never banned the exportation of slaves.

Sun, 04/27/2014 - 21:27 | 4702573 Dr. Sandi
Dr. Sandi's picture

Importation of slaves is what caused the 'social problems' south of Canada

Exportation of slaves is just a quick and evil way to make a lot of money. And with the exportation goes said 'social problems.'

Sun, 04/27/2014 - 22:00 | 4702655 Toronto Kid
Toronto Kid's picture

Importation of slaves was banned in 1793 into Canada, and in 1808 in the United States. That's a fifteen year difference and too short a time to account for 'social problems'. The main difference between Canada and the United States were the huge plantations in the United States.

But Canada cannot take the high ground on slavery; we participated in that abhorrent practice.

Sun, 04/27/2014 - 22:05 | 4702673 Matt
Matt's picture

Didn't all the slaves have a choice, in 1776 and 1812, if they fought for us, they got freedom, $50 (in gold, probably 2 ounces) 10 acres and a cow?

Mon, 04/28/2014 - 01:40 | 4703066 Seer
Seer's picture

And the deal got revoked.  That was pretty much how the govt worked from the get-go: ask the natives.

Sun, 04/27/2014 - 22:23 | 4702713 general ambivalent
general ambivalent's picture

We are all slaves to Harper's hair-helmet now. God bless us all.

Sun, 04/27/2014 - 17:59 | 4701994 Spitzer
Spitzer's picture

The mental psyche of the people is all that matters. 

When all of my Dads renters started buying houses in about 2002, he said, interest rates must go up soon.. Yet, here we are.

Sun, 04/27/2014 - 18:31 | 4702098 DoChenRollingBearing
DoChenRollingBearing's picture

In 2002 I would have never guessed that we would have this ZIRP for so long either.  I have learned to diversify and not be too dependent on bad guesses...

Sun, 04/27/2014 - 18:20 | 4702064 WhackoWarner
WhackoWarner's picture

Speak not you of little knowledge.

 

Canada has always been different than the US.  Maybe not so much this time in the big city demand but different none the less.  This is a very simple analysis.

Sun, 04/27/2014 - 18:45 | 4702146 neidermeyer
neidermeyer's picture

You said a mouthful Deathrips ,, FULL RECOURSE on top of being at least 20% down and usually held by a local bank that doesn't screw up the paperwork or their ownership rights ... people are going to stream over our border in U-Hauls and file for protection when this thing pops.

Sun, 04/27/2014 - 22:27 | 4702723 Deathrips
Deathrips's picture

The signature creates it. It balances phoney markets. There was none to lend. Benchmark against what?

Invest inwards.

 

Cheers

 

RIPS

Sun, 04/27/2014 - 20:08 | 4702299 Event Horizon
Event Horizon's picture

So, the conclusion of a that chart is that Canadian housing is in a bubble because the line doesn't follow the US.. What a crock... same tune, no facts... ZH has been running this theme for so many years and they have been WRONG because the Canadian market variables are not the same as US.

It is the land stupid... I am in a desirable area around Vancouver, we are starting to hit all time highs.. my house has risen 300% in 12 years and there were "BUBBLE" preachers back then. THEY WERE WRONG. Vancouver is surrounded on three sides by US border, Ocean and mountains, that leaves growth to go only East. Much of that land is zoned agricultural. So, the land for development is extrememly limited and further away from the city.. The BUBBLISTAS NEVER mention this because they haven't got a freakin clue. Canada gets corrections but unless we get massive global deflation, no big ones.. and when Yellen fires up the liquiditiy machine this summer we are up and off again..

The REAL situation, only 10% of land in Canada is private, 90% live within a 100 mile band on the southern border, the available land within that band is far more scarce than available private land in the US.. making land values and development costs higher in Canada. The reason Canada is different is the population concentration due to Climate and geography. Bubble preachers simply do not understand the tight realistic private land supply in Canada vs US.. even though it is a massive country.

 

Only 10% of the land of Canada is privately held... vs 60% in US,,, 

90% of the population lives within a 100 mile band along the US/Canadian border concentrate West and East(makes private land even more scarce within this band)

NO CAP GAINS on primary residence (becomes long term inflation/investemnt hedge)

NO MORTGAGE TAX DEDUCTABILITY (people pay off mortgage less inclined to perpetually refi)

MORE Canadians work for Government and reitire with big pensions 

Canada allows in wealthy foreigners

NO walking away from mortgage debt  (you can't run form your debt obligation)

Very high land development costs (supports developed land prices)

Canandian middle class is wealthier than US...

Sun, 04/27/2014 - 21:31 | 4702585 Dr. Sandi
Dr. Sandi's picture

By tradition and necessity, housing prices track local incomes. When the prices start to slip away from the local income, THAT'S A BUBBLE.

Bubbles have to burst when there's no new crop of idiots left to buy houses that nobody can afford from their actual income.

Sun, 04/27/2014 - 22:10 | 4702624 Event Horizon
Event Horizon's picture

By tradition,  you mean on average,, the Vancouver RE market has NEVER been average.

Vancouver RE income/price ratio has been high for 30 plus years,,  recency bias..

My point is you can't use the metrics that are used in the US... the market is not the same, never has been. Vancouver attracks wealth from both globally and nationally, local incomes are less relevent than one would think.

Mon, 04/28/2014 - 01:34 | 4703051 AbbeBrel
AbbeBrel's picture

Your argument sounds so similar to the one that the Australians use for their high valuations.   Except that the Australians, when China finally implodes, will have a rough go of it -  while Canucks at least have a oil-sucking neighbor to the south that is not likely to implode (cleanest dirty shirt and all that).    But keep in mind that all valuations are psychological and rely on a continuous conspiratorial supply of Greater Fools and Banksters.

Mon, 04/28/2014 - 10:24 | 4703688 Event Horizon
Event Horizon's picture

I haven't analyzed Australia,,, I am simply explaining the reasons why the bubble callers have been wrong for over 30 years, it does correct but a bubble suggests a 50-75% hit.. NOBODY has an objective argument that explains this market being in a bubble. Here is the difference,, even though Canada has a massive land area, the area that is available for housing development is actually very small. In BC iit is even tighter than the rest of Canada, around 5%,,

Rough calculation, the area/capita available in BC is half that of the area/capita in US. Further, BC is still experienceing internatinal and national inmigration, most of it to the Greater Vancouver region. People need to understand that most of Canada has a harsh environemnet that pushes people into tight population pockets on the coasts. This is completely different from the US. My home is priced now right at replacement value, land plus building. Most of the gain has been land value.

To get a sense of the differnce from the US take a map of Canada and black out 90%, black out 95% of BC, then take a map of the US and black out 40%.. This the key metric that gets missed. Now, continue to add people to BC, the avalaible land gets tighter, that is the key,,, it is the land supply. In the US crash, areas with tight land supply didn't get hit hard, recovered fast.

The truth is Vancouver RE is highly correlated to global liquiditity not local affordability metrics (it never has been), global deflation will cause a hit, inflation will cause it to rise,,  Since Yellen has been tighteneing into weakness, she will switch on the tap maybe by summer, then Vancouver RE market takes off agian..

So, if you beleive we get global deflation then Vancouver RE gets hit, but IMO global deflation will be met with more liquidity programs from central banks, likely sometime this year..

The Vancouver bubble preachers have never understood the market here, they just yell bubble applying metrics that have failed here for over 30 years. Definition of INSANITY. If anyone wants to make the bubble argument than what has changed over 40 years other than LESS land available. I have yet to see a cogent argument. Lots of opinions.. no objective analysis.

Sun, 04/27/2014 - 21:32 | 4702588 Let them eat iPads
Let them eat iPads's picture

Ah, the call of the Vancouver real estate cheerleader.

"We're running out of land...everyone wants to live here, wealthy foreigners...blah, blah fucking blah.....

Asshole.

Sun, 04/27/2014 - 22:05 | 4702672 Event Horizon
Event Horizon's picture

TROLL,, I didn't say we were running out of land, I am stating the facts, land values ARE higher vs US due to tightness in developable land and population concentrations. The US population is more dispersed with MORE private land available..

It is your choice to be ignorant. the bubble preachers have been going for decades now and have been wrong because they don't understand the local Canadian markets. I am saying there is NO bubble, not that it doesn't correct.

This asshole has made 1.2 million tax free in RE while local assholes like you scream bubble and pissed away money in rent for years and years because they haven't got a clue.

 

Mon, 04/28/2014 - 02:15 | 4703102 Deathrips
Deathrips's picture

Dude..

I hope you dont have money on that..

 

RIPS

Mon, 04/28/2014 - 09:39 | 4703702 Event Horizon
Event Horizon's picture

Why, explain, is that an argument or just an opinion? 

Sun, 04/27/2014 - 17:42 | 4701938 MrSprottJr
MrSprottJr's picture

As long as they leave our hockey rinks alone!!

Sun, 04/27/2014 - 17:50 | 4701959 unrulian
unrulian's picture

yea... well, all those rinks we enjoy are subsidized by our illustrious municipalities whos only source of revenue for those frozen money pits is property tax...based of course on the inflated valuations of our houses.

Sun, 04/27/2014 - 20:25 | 4702393 scuttlebutt
scuttlebutt's picture

Brand new hockey arena being built in Edmonton as we speak.  And yet, try driving on one of the cities pot hole infested roads.

We do have too much debt. No doubt. And the Canadian housing bubble, it will pop. As most here on ZH claim. Only, it will be at the same time as the world debt bubble pops.

Last night, over a fine supper, with a friend who is a bank employee, we discussed the merits of selling our homes (being mortgage free), and rent in the mean time, then when everything goes for shit, buy low, and live comfortably for the rest of our lives.

 

Sun, 04/27/2014 - 22:07 | 4702680 Matt
Matt's picture

Potholes are inevitable when you have real winter. The roads have to be fixed every year. One of the benefits of asphalt over cement roads is the stopping distance is vastly superior. Plus, more jobs!

Sun, 04/27/2014 - 18:22 | 4702069 WhackoWarner
WhackoWarner's picture

Nope.  Hockey too can be sold.  Rinks? I  See toxic waste storage facility.

Sun, 04/27/2014 - 18:48 | 4702149 Cpl Hicks
Cpl Hicks's picture

Isn't that what they are now? Filled with a big crowd of hosers, eh?

Sun, 04/27/2014 - 17:45 | 4701946 22winmag
22winmag's picture

Canada must have their own "Franklin Raines" and "National Association of Realtors" to create such a mess.

Sun, 04/27/2014 - 18:49 | 4702156 pitz
pitz's picture

The mess has been created by the government, with $900B of subprime mortgages being "insured" by the government by way of the CMHC.  Per capita (10:1 population ratio), this is dramatically worse than Fannie Mae/Freddie Mac who were, combinied, at best, $6T entities.

The worse part about it is that almost 100% of the loans in Canada are short-term resetting in nature, the sort of loans that caused the most damage in the USA.  Not the 30-year term fully amortizing loans that most American long-term homeowners are familiar with. 

Sun, 04/27/2014 - 17:48 | 4701957 SmilinJoeFizzion
SmilinJoeFizzion's picture

I bought 5lbs of King Crab in Vancouver in 99 for 5$ us./lb

Sun, 04/27/2014 - 17:51 | 4701967 unrulian
unrulian's picture

You can still get Nova Scotia lobster on the wharf for $5 /lb now

Sun, 04/27/2014 - 17:53 | 4701977 Deathrips
Deathrips's picture

Great... Just Great... not only am i pissed at money changers...but im fucki8ng hungry now?!!

 

FUCK

 

RIPS

Sun, 04/27/2014 - 18:03 | 4702007 foxmuldar
foxmuldar's picture

mmm hungry now for a good Crab cake sandwich and a cold beer. 

Sun, 04/27/2014 - 17:59 | 4701991 foxmuldar
foxmuldar's picture

And gas was selling for $.99 cents a gallon. Now for that money if you want crabs you need find a stinky bitch and for that low price gas you need to stick your head up someones ass. 

Sun, 04/27/2014 - 21:34 | 4702594 Dr. Sandi
Dr. Sandi's picture

 

I bought 5lbs of King Crab in Vancouver in 99 for 5$ us./lb

You're not the first guy who came back from Vancouver with crabs.

Be careful out there kids. And remember, condoms can't protect you from EVERYTHING.

Sun, 04/27/2014 - 17:50 | 4701966 Carpenter1
Carpenter1's picture

I live in Vancouver.

Delusion, complete and total delusion. I can hardly stand to walk down the street. People are so clueless it's hard to imagine. Everyone here is so so desperately in need of a wake up call, americans were nothing compared to ignorant canadians today.

Sun, 04/27/2014 - 18:13 | 4702041 aardvarkk
aardvarkk's picture

There are actually different kinds of ignorance.  A lot of people in the big cities now are in big trouble, and their ignorance makes that a bigger problem than it could be.  This is definitely true in the US and I assume in Canada as well.

But here, go into the back country and you'll find some ignorance, yes, but what of it?  My parents grew up in the depression.  Their families didn't even notice it.  It was life as usual down on the farm and in the small towns.  Just keep on keeping on and do what you gotta do to get by.  I visit family often and that's how things still are out there, even if many of the farms have consolidated.  They laugh at the big politicos as well as the celebrities, and then jump on the tractor and head for the field.  Nothing short of nuclear war will imjpact these people in a way they can't ignore, so why get their panties in a twist about it?

For me, the older I get the more I yearn for a living situation where it's safe to be ignorant.  Not long now and I'll feel like I have enough to make the jump.  And when I finally get out there (the same kind of place my parents worked hard to leave) I'm going to be blissfully ignorant of as much as I possibly can.  I'll study philosophy and history and read classics and learn a lot...but I may not look at another source of information on current events for 5 years.  It's too full of hyperventilation to be useful.  Better to watch the results in longer time increments and make my judgments from that.

Sun, 04/27/2014 - 18:20 | 4702053 Haole
Haole's picture

My sentiments exactly.  The douchebaggery in Vancouver is off the richter.  Even the lap dogs getting taken out on the grass like a frickin' appliance have smug looks on their faces.  It is a beautiful city, half the year anyway but I still think it's behind Australia in utter stupidity as it relates to real estate.  Having just been through WA I have no trouble saying this.  Vancity Credit Union offering 5% down (with available "customized solutions" if applicable) mortgages on condos and I believe there is a new proposed condo development  with a social housing component at Hastings & Columbia with 0% down available.  The condo market is over in my opinion.

Sun, 04/27/2014 - 18:27 | 4702084 WhackoWarner
WhackoWarner's picture

I agree I agree I agree.....15 years ago bought property in isolated BC Coastal Canada.  Paid next to nothing.  If the value sinks now?  I will be back to what I paid.  So what?

Could have bought in Vancouver.  Took my Vancouver "down payment" and paid cash for 10X the value in land and house...Do I care if the bubble pops?

Sun, 04/27/2014 - 18:43 | 4702137 pitz
pitz's picture

Exactly, huge amounts of subprime credit available in Canada, from the likes of Vancity, and through the chartered banks with CMHC subprime mortgage insurance.  But they have been tightening up considerably which has contributed to the very poor performance of RE recently.

Sun, 04/27/2014 - 18:51 | 4702163 neidermeyer
neidermeyer's picture

We have friends in Vancouver BC ,, they visited us last summer and are clueless about bankster economics ... but they have an excuse , they are both nurses from the Philippines .. I guarantee you that when they get their ass handed to them on a silver platter with that overpriced house they just bought they won't stick around to be the banks bitch ,, they can have the house ,, they're getting in their bright shiny SUV for Portland and the nearest 747 back home.

Sun, 04/27/2014 - 17:52 | 4701973 Jack Burton
Jack Burton's picture

Too much printed money and too low of interest rates and easy loans. Too much money chasing houses. How does this benefit people who want to buy, and those that own, so what if you sell high, where ya gonna live after the sale? Most likely another overpriced house. How did a place to live become a speculative tool? See the financialzed economic model, lots of money is made by lots of people who are not the home buyers or owners. Follow the real money, the bankers are getting rich and so are the RE pimps.

Sun, 04/27/2014 - 22:40 | 4702749 general ambivalent
general ambivalent's picture

Why? Because it makes good sense to spend 40 years paying for a home built with decaying materials that might last twenty. 'Hey, kids. Want the house left to you? Tough luck, in the will there's cab fair to the mortgage depot.'

http://stagevu.com/img/thumbnail/uliktptzqxhybig.jpg

(Bubbles' Bubble machine)

Sun, 04/27/2014 - 17:55 | 4701983 nje
nje's picture

It is very bad up here in Toronto and its suburbs, and even worse in Vancouver. Condos especcially. Right now 700sq ft condos on the edge of urban toronto are $280k to buy. This has pushed so many young professionals like me into renting. But even as the numbers of renters are skyrocketing, condo prices are skyrocketing on the foreign investment coming in. My father's girlfriend just recently sold a block of 15 condo units to a single investor from china. And still, day after day torontonians hear about yet another 50 floor condo going up with starting prices each higher than the last. When this bubble bursts its going to be a very hard sharp downturn in property prices. Its going to put the majority of young professionals who purchased underwater. unfortunately unlike what happened to the states in 2008 when their property prices pop, canadians aren't able to just walk away legally.

Sun, 04/27/2014 - 18:20 | 4702062 Tale2cities
Tale2cities's picture

Property brothers to the rescue. I want to choke those two. I think the prices are astronomical. Can't walk away from a mortgage in Canada so I always assumed things aren't too out of line?

Sun, 04/27/2014 - 18:26 | 4702079 BoingBoing
BoingBoing's picture

This is the same story in London, UK. The local government talks about new builds coming online 'soon', but they're either (a) too expensive for someone earning less than £75,000pa to take out a mortgage on, or (b) pre-sold as 'buy-to-leave' investment properties to Chinese, Russians and Arabs.

But oh no, we can't dare prevent overseas cash purchasers (like the Danish who have a smart rule which prevents the slow wholesale of Denmark to foreigners by limiting sales to people who have lived there at least 3 years) because something something something GDP.

I don't get it - inflate London prices beyond what a normal person can afford, all by selling the UK piecemeal to people living overseas who don't give a shit, just so you can pretend the 'economy' is recovering? 

I also worry that when a country only has its land left to sell overseas, it really has exhausted all alternatives for regenerating its economy.

Sun, 04/27/2014 - 21:12 | 4702541 123dobryden
123dobryden's picture

so better would be if they were selling?

 

they are buying because london and UK are still the best place to park your capital, ...it is a simple fact, accept it...

Sun, 04/27/2014 - 18:33 | 4702100 WhackoWarner
WhackoWarner's picture

I guess if you are not creative then you pay.  $280K for 700 sq. ft.?   Insane.

I would take the $280K and buy investment/retirement/vacation land/house  somewhere ....you can buy outlying land/home/farm  for cash and still have $200K left.  Then rent.  Pay cash for where you wish to live eventually.

 

 

Sun, 04/27/2014 - 20:10 | 4702335 NeverForgetSilver
NeverForgetSilver's picture

Rent in my city is very high. The purchase price of the house and yearly rental income is about 15-20. I live in Calgary.

Sun, 04/27/2014 - 22:04 | 4702671 Toronto Kid
Toronto Kid's picture

Much the same for Toronto. Check mls.ca for rental prices for Toronto Ont.

Sun, 04/27/2014 - 22:17 | 4702698 NeverForgetSilver
NeverForgetSilver's picture

That is why I bought two investment properties last year the the year before. The rent will pay for all the expenses and has a little left. The mortgage will be paid off in 25 years and whatever left is mine. I also has more money in stock and gold/silver related investments. It used to do great but not for these couple of years. 

Mon, 04/28/2014 - 01:14 | 4703018 pitz
pitz's picture

Did you use normal long-term interest rates (ie: 7-8%) in your calculations, or 3%?  Unlike in the states, in Canada, you can't fix your mortgage at a term longer than 5-10 years without paying a giant premium.  Obviously the whole assessment of economics changes if a more appropriate interest rate is used. 

 

Mon, 04/28/2014 - 01:39 | 4703064 NeverForgetSilver
NeverForgetSilver's picture

I used 3%. If interest rises, I can pay it off quickly with my income. I think the US interest will stay low for a long time until they pay off their national debt (LOL). Canada has to follow US since high Canadian dollar will choke off export.

 

 

 

 

 

 

 

 

Sun, 04/27/2014 - 18:35 | 4702107 pitz
pitz's picture

Actually there's been a slow melt in Toronto, Vancouver, and Calgary over the past year.  What has happened is that the low end of the market has dropped out, while the real estate salesmen are still doing a decently brisk business at the upper end.  So they report higher 'average' sales prices, but very few people actually manage to get higher prices on their actual houses. 

Sun, 04/27/2014 - 20:15 | 4702354 NeverForgetSilver
NeverForgetSilver's picture

Not true for Calgary. The house medium price is up 8% from last year. The price finally passed the 2007 high at the end of last year. I guess I would consider the price not crazy if it stays flat for 7 years. There isn't too many alternatives for investment and thee are a lot of rich people in Calgary. If oil industry tanks, it will be a different story.

Sun, 04/27/2014 - 23:07 | 4702826 pitz
pitz's picture

There's tons of other investments (ie: Talisman @ $10, Suncor @ $36, etc., etc.) in Calgary.  And Calgary has nothing rich-people wise compared to Toronto.  See my earlier comments concerning the lower-end dropping out, and only the higher-end houses moving.  Very applicable to Calgary, hence the people running around claiming price increases when nothing has really increased at all.

Mon, 04/28/2014 - 00:40 | 4702893 NeverForgetSilver
NeverForgetSilver's picture

If you don't know, Alberta's income is by far the highest among Canadian provinces. The pay is supported by its resource industry. It is the avarage income which counts for housing market not the super rich. If you don't care about the cold whether, this is the most suitable city for living. I love this city.

As you talked about the price of lower end housing, I bought a 4 plex less than two years ago and another townhouse late last year. I check house prices on daily basis and also check stats. The price has definitely risen for last few years. It is very obvious if you check Realtor.ca. I feel that I should have bought a little bit earlier.  Please check  this site:

http://www.creb.com/public/seller-resources/housing-statistics.php

Check condo and townhouse market. They tend to be on the low end.

As for the income, I was searching for jobs two years gao, Calgary's pay is the best for the same jobs. You just need to check Canadian income statistics. I am not saying there is no rich people in Toronto. There definitely are more rich peole than Calgary. I was talking about the percentage of high income people. It is easy to find jobs which pay you over 200K in oil/gas company. The reason I know is that I am one of these. The unemployment is very low. People call it Alberta phenomena. Sorry if I hurt your feelings.

 

Mon, 04/28/2014 - 01:09 | 4703012 pitz
pitz's picture

$200k is not easy to find in Alberta's oil and gas sector, unless you are a very senior engineer or geologist.  A few trades make that,but as independant contractors (ie: their gross), and that's up in Fort McMurray, not Calgary proper. 

MLS data isn't all that useful as those are just asking prices.  Transactions generally are quite a bit below that.  People are really deluded right now. 

My feelings aren't hurt, just stating some facts here so people don't get carried away.  Prices are not rising.  And there isn't actually much "resource industry" in Calgary.  The RE industry is a far larger provider of jobs than anything to do with resources. 

Mon, 04/28/2014 - 09:09 | 4703093 NeverForgetSilver
NeverForgetSilver's picture

I live here and considering buying rental property since 2005. I delayed purchase since I saw bubble coming and it did pop in 2008-2009. Then the price recovered slowly year after year. The curve here is not  as fast as the national average. It finanally reached the peak level of 2007 last December. I watched the price go up so I decided to buy the first investment in 2012 and the second in 2013. The second is not as good as the first one but I paid a lot more. I watch the townhouse rises from the 200-300K range to 300-400 range in the last two years around downtown area. A few of my friends were also looking and finally gave up recently. They were quite upset by following the price up. My own house is upper end so it doubled in the last 10 year.

As I know of, the stats is purchase price not asking price. Anyway asking and purchase price follow same trend.

As for whether it is easy or not to get 200K I think it depends on your perspective. Off course I talk about total income not base salary. These are seniors professional jobs. Field geologists and engineers are paid much more since these people are  hard to find.

Sun, 04/27/2014 - 18:01 | 4702002 foxmuldar
foxmuldar's picture

I wouldn't call a 14.5% drop in new single family home sales a pause for breath. I'd call it a gasping for air. 

Sun, 04/27/2014 - 18:09 | 4702027 billwilson
billwilson's picture

Vancouver insane.

Toronto nuts.

Rest of country high but not insane.

Immigration and Chinese corrupt money are pushing prices up in hot markets. But that is not the whole country.

Have not seen crazy appreciation in my market (mid tier). Previous house bought in 1995 for $140,000 now $290,000. So doubled in 20 years (about 5% a year)

Current house up 28% in the last 7 years ( so about 4% a year)

 

Sun, 04/27/2014 - 19:03 | 4702110 pitz
pitz's picture

Very little evidence of any 'foreigners" coming to Canada with money.  Its mostly the extensive use of subprime credit that's responsible for the bubble, all guaranteed by the government believe it or not.  "foreigners" is just a convenient (and rather racist) scapegoat of the ignorant.

Sun, 04/27/2014 - 18:10 | 4702029 Confundido
Confundido's picture

The problem with Canada is that unlike the US, they welcome inmigrants, particularly those with money to invest in real estate. As well, Canadians don't mind devaluing their dollar, which makes it even cheaper for inmigrants to keep buying. Expect 1 USD to reach the 1.25 CAD in 2015...which is why, the largest threat to Canada is the price of gold....think about why....

Sun, 04/27/2014 - 18:13 | 4702044 Deathrips
Deathrips's picture

BINGO!

 

How do Canadians not realize that they print more per capita than the US?

The balanced budget, is like the recovering deficit in america. A LIE!

 

RIPS

Sun, 04/27/2014 - 18:30 | 4702093 orez65
orez65's picture

"... the largest threat to Canada is the price of gold....think about why..."

OK, I thought about it: because gold will expose the fraud that the Canadian dollar is.

Sun, 04/27/2014 - 19:26 | 4702243 pitz
pitz's picture

Housing going down is profoundly deflationary.  1 USD = 0.75 is far more likely as the US enters another downleg and Canada continues to suffer housing-driven economic deceleration.

Sun, 04/27/2014 - 20:19 | 4702373 caShOnlY
caShOnlY's picture

The real threat to Canada is a strong CAD.  85% of Canada's exports head to US.  When the CAD reached .92 US the exports started drying up!!  No, gold doesn't matter.  What matters is GM, Ford, Chrysler stay in Canada and the many Canadian factories stay healthy. 

Sun, 04/27/2014 - 18:11 | 4702033 SmilinJoeFizzion
SmilinJoeFizzion's picture

Get out now. Or for my Canadian friends- get uut now

Sun, 04/27/2014 - 18:15 | 4702046 ebworthen
ebworthen's picture

What!?

You mean it's a worldwide central bankster bubble, version 2.0?

I'm shocked I tell you, shocked!

Someone call Greenspan!

No wait....

Sun, 04/27/2014 - 18:14 | 4702047 Signs of the end
Signs of the end's picture

Toronto is going to be the Yuan clearing centre for North America, expect lots, and I mean lots of Chinese money to continue flooding in, and I mean flooding in as in a Tidal wave into Toronto and Vancouver, and also into Alberta. Everything East of Ontario will suck eggs but from Ontario to BC don't expect this housing bubble to pop anytime soon. It may never pop, at least in Toronto and Vancouver. And the bigger the 'Crisis' in the YOU-CRANE becomes expect to see more cranes lining the skyline of Toronto all the way from the airport to downtown as the billions that used to be hidden in Switzerland are now hidden in Toronto. The Canucks welcome Eastern money, no questions asked, so if you got a billion or so stashed away, come to The Great White North - the penthouse at the Trump Tower I believe is still for sale in downtown TO. You may even get a private audience with the PM.

Sun, 04/27/2014 - 18:38 | 4702119 pitz
pitz's picture

There's no data to suggest that there is net foreign investment in Canada, especially by the Chinese, Iranians, Indians, or the other groups blamed.  What there is huge evidence for is a large domestic credit bubble, lax lending standards, and enormous amounts of subprime buyers with less than 20% down. 

Sun, 04/27/2014 - 18:18 | 4702057 deerhunter
deerhunter's picture

rush hour in Chicago finds 20% of Canada's entire population on the freeways and tollways at the same time.  Who cares what housing costs if you can't make a living there?  Canada is lovely and dad was born nw of Edmonton and grew up in a log cabin but came to USA for schooling and to make a family.  I am kind of glad he came south.  I am all for King Crab at five buck a lb.  Sign me up for some of that.  19.99 a lb here.  Fresh yellowfin tuna 25.99 and swordfish the same last week at the fish store.  I love fresh fish but even that hasn't seen saltwater for at least four days by the time it hits Chicago.  Probably longer.  

Sun, 04/27/2014 - 18:37 | 4702108 orez65
orez65's picture

"Fresh yellowfin tuna 25.99 and swordfish the same last week at the fish store.  I love fresh fish ..."

You can get farm raised Atlantic salmon for about $8.99 per pound most anywhere in the US.

Sun, 04/27/2014 - 21:39 | 4702605 Dr. Sandi
Dr. Sandi's picture

 

You can get farm raised Atlantic salmon for about $8.99 per pound most anywhere in the US.

Fortunately, you don't have to eat it.

Sun, 04/27/2014 - 18:20 | 4702063 Bunga Bunga
Bunga Bunga's picture

Canadians stole US home prices! Invade and get them back!

Sun, 04/27/2014 - 18:20 | 4702065 km4
km4's picture

OT but good

BREAKING: Sources say Toyota fleeing CA, taking 5,000 jobs to more business-friendly Texas http://pando.com/2014/04/27/breaking-sources-say-toyota-fleeing-ca-takin... via @pandodaily

Sun, 04/27/2014 - 18:52 | 4702161 yogibear
yogibear's picture

"BREAKING: Sources say Toyota fleeing CA, taking 5,000 jobs to more business-friendly Texas"

More companies need to flee tax-happy states like CA, NJ and IL. Vote by walking away from the out of control public union states.

Turn them into Detroits.

Sun, 04/27/2014 - 18:23 | 4702071 MountainMan
MountainMan's picture

They've been calling it a bubble about to burst for the last 10 years. The fact is, well to do immigrants are choosing Canada over all other options. There are areas in Toronto where you can't find a house for sale. The demand side is very real. Le't revisit this bubble thesis again in 3 years time.

Sun, 04/27/2014 - 18:39 | 4702122 U4 eee aaa
U4 eee aaa's picture

What is the price to income ratio these days, 7?

Sun, 04/27/2014 - 18:39 | 4702123 pitz
pitz's picture

There's lots of houses in Toronto for sale.  Demand side has weakened dramatically over the past year.  Sales have slowed only because sellers are in disbelief over the declining prices and the schism that has developed between the declining market and the rising delusional behaviour of the sellers.

Sun, 04/27/2014 - 18:38 | 4702114 U4 eee aaa
U4 eee aaa's picture

To be fair, what popped the US bubble was the wrenching interest rates sharply upwards when Bernanke took over. That was the same thing that triggered the US depression in the '30's. The Canadian CB hasn't done that yet. If they were to wrench rates they would create the same domino affect the US has suffered. All I know is that the Canadian CB is afraid to cough or sneeze with all those debt burritos it has been eating

Sun, 04/27/2014 - 18:41 | 4702128 pitz
pitz's picture

Japan has had ZIRP, yet their house prices don't go insane.  Once demand has been fully met, prices go down.  Which appears to be what has happened in Canada. 

Sun, 04/27/2014 - 18:42 | 4702133 yogibear
yogibear's picture

It's a test to see how inflated this pig becomes.

Sun, 04/27/2014 - 18:49 | 4702152 Rising Sun
Rising Sun's picture

80% of a bank's business is in real estate.

 

Canada has six, that's right, a whopping six, count 'em twice to be sure major banks.

 

So when real estate crashes, how many banks will go bust is the real question for Canada???

 

Big ugly for Canada is on the horizon!!!!

 

 

Sun, 04/27/2014 - 18:53 | 4702164 pitz
pitz's picture

None of the big-6 banks are likely to experience any problems, or go bankrupt.  Because they don't take any of the risk of the loans.  Nearly all of the at-risk mortgage market in Canada is guaranteed by the government, the bank effectively holding government bonds. 

If you look at the mechanics of it all, the banks actually have a short position on the housing market as price declines will increase the risk premium they are able to charge borrowers, without any fear of losses associated with defaults. 

Smaller credit unions that don't use CMHC subprime mortgage insurance, or Credit Unions that lend to small businesses involved with real estate construction, retail, etc., could be in very serious trouble though.

Sun, 04/27/2014 - 19:22 | 4702238 andrewp111
andrewp111's picture

Housing prices should linearly track income in a normal economy.  Incomes in Canada have risen massively because of oil exports.  Are you sure that the Cnaadian house price rise is a bubble, and not just reflective of a massive income rise?

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