This page has been archived and commenting is disabled.
The Canadian Housing Bubble Puts Even The US To Shame
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.
»
- 38626 reads
- Printer-friendly version
- Send to friend
- advertisements -
Yes incomes have risen with oil exports (although the oil industry has only served to replace Canada's collapsed/failed tech export industry over the past decade). However, not enough to justify the tripling of house prices.
I already traded in my house at the community yard sale. Got a good deal, one of those huge bubble nets and a banana slip-n-slide for the front lawn.
Canada is the #1 exporter of oil to the US. Canada has 30% of North America's natural gas. Canada exports over half the durum wheat (used in pasta for example). Canada exports over half the worlds potash, used as fertilizer in farming.
So when TSHTF, Americans have decisions to make:
1.burn their iPhone to heat their house
2. eat their iPhones
3. call Canada
Nothing wrong with high real estate prices in a country that exports key products the world needs. Hasnt anyone been to Norway recently?
I love Canada and Canadians. Don't pull an Obama and try to divide us. That's right out of Obamas dirty little playbook.
Btw,USA is the third largest producer of oil in the world. So I think we'll be OK. Farming is what my family does. Trust me . We're OK in that department too.
"USA is the third largest producer of oil in the world"
But consumes twice what it produces ... cutting energy consumption in half is a big leg down.
Call Canada?
More like margin call Canada. The part that isnt owned by the london zionists is owned by the chinese. You dont own anything.That is if the US doesnt take it first.
Id be surprised if and when resources are needed if canada just surrenders to the US or half ass attempts to repel.
Smug, eh?
*Id be surprised if and when resources are needed if canada just surrenders to the US or half ass attempts to repel.*
Y'all already tried that. Y'all risk a nasty guerrilla war if y'all try it again.
No need to surrender what has already been sold.
Y'all can join the circus or realize that they draw lines.
They is not me. I do put a quarter pattern at 400 yrds.
Lets try and find the real culprits>?
I know aboot the english sponsored white houes burning. Cheers!
RIPS
The English sponsored the White House burning from their lordly estates. But it took a determined bunch of boys from Halifax to get the damned job done!
You might have Super Hornets, but we have super mosquitoes that would put Russian winters to shame. And we got winter too, so just burn down the White House yourself this time so we don't have to.
Ya... but Canada is the new middle class of North America.
Real estate is highly local. I live in Calgary, a booming petroleum center. The average family income is $C95K, the unemployment is 4%, the property tax is 0.6%/year and insurance costs about $600 for a typical house. With the level of inflation and lack of choice for investment, house seems very attractive. Unlike Vancouver and Toronto which are suffering from high unemployment and low family income, the Calgary market is not unreasonable. Vancouver and Toronto is more or less special since there a lot of immigrants coming in. They pay cash and bid up house price like crazy. It is been like that for several decades.
I thought I found a house on Vancouver Island for 190k but it turned out to be a 50X100 foot serviced lot.
Would love to see an Australian graph next to these. Shit is getting insane over here, Average price for a home is around $600k and no one is blinking, Too busy signing up for what you Americans call 'sub-prime' loans and feeling like Kings!
That's the whole idea. If you feel like a king, how do you think the politicians & bankers feel?
That was John Howard's forte. And he was lucky enough to get the boot only months before he would have been called bullshit on.
Median family incom in Canada is 76,000/yr and median individual is 27000$. Average home is 6 times family income and 17 times indivdual. It used to be that 2.5 times income was normal. They may have a bubble up there.
I read these articles about Canada and I think the US man on the street has NO IDEA the population of CANADA...THE ENTIRE FUCKING COUNTRY...is only around 34 million people. And out of those 34 million, the standard of living is pretty damn good at all levels of income. The Vancouver, Toronto, Montreal, and Calgary markets are all being invaded but at different levels of income and wealth. For example - Chinese and Euro money driving the Vancouver market "totes cray cray" as the hipsters say these days. Other markets, not so much on the high end, but the low end is swimming with renters.
So ya, when you consider 34 million people, a high standard of wealth, amazing natural resources (oil sands, diamonds, minerals of all sorts, etc) and a lack of supply for upward mobility and foreign wealth?
Boom! Enjoy your ride Canada. Poutine for everyone!
Working in new home construction, up here in Ottawa eh, I can tell you:
1.Ridiculous amount of new homes being built.
2. City is holding back many of the large builders, by forcing them to "fill in the pockets" before resuming their massive phases on the outskirts of the city
3.ALL of the new home owners are fresh off the boat immigrants. For every 100 homes I install in, maybe 15 new owners are english speaking "whitey."
4. Lots of guys in piece-work installation making well over 100k/year. 3rd bambino on the way, is gonna keep me from breaking 180 this year. (don't tell the wife I said that)
5.The builders are in a frenzy to increase the pace...that being said; even at the current pace, there's no way things can go on like this.
6. If this is a bubble....blow baby blow!!
No more printing crackers, haven't you heard? You need to respect the People of Colour. Kill Whitey (with corrupt banks, normal banks, whatever, just get it done).
Also, most of the white kids in suburbia are named 'Shawnequia' or something similar now. So there's still HOPE.
You'll be a minority in our own country in your lifetime and you're not going to like it. Just wait till the Chinese population swells to 10 million+ and 2d generation "Canadian/Chinese sue to make Chinese an official Canadian language.
Time for the West to be colonized. Plain and simple. In 10 years Canada will have 12 official languages....it has clearly worked out so well in South Africa.
Ummmm.... I've been to South Africa. Killed lots of shit there. There is a big difference between their immigrant population and ours. Very big.
Ours is largely productive and comes here for the relative politcal stability. They do strange things like bring capital and start businesses. Our business employs people speaking about 9 different Asian and European dialects because locally it is already that complex and doing BUSINESS requires it. On the other hand South Africa is loaded with murdering "refugee" North Africans who bring their problems south and spread them. In this sense the US is closer to the South African model than we are. Hoepfully we will make the refugee/illegal model the exception and not the rule. As always - time tells.
Fuckin' lightweights. If you want a housing bubble, then come to Australia, where one day major newspapers can say "The Boom is over" and the next "Sydney and Melbourne headed for new real estate price records!".
Then there's the city I live in. Perhaps 500,000 people in the entire region, but thanks to "the mining boom", 2 bedrooms in a middle of the road suburb with nothing outstanding (poor public transit services, one overpriced food store - you know... suburbia) on a 332sqm (or 3500sqft) lot costs $500,000. One bedroom villas in a "retirement" development are $400,000+. Even the less desirable suburbs are $350,000+ for something that needs work.
The average income is apparently $69,500 for NSW, and the average house price of $468,000 gives you a Price to Wage ratio of 6.7. Nevermind that when you carry the loan for the full term, at 5.15%, you're paying more than $826,000. No one really cares for the final cost though - just what they can borrow now.
Page 16 of the PDF I've linked below has the best evidence of a bubble - produced for the NSW Government no less, but I hadn't heard about this until this morning when I looked for it.
http://bit.ly/QT9n3X
HGTV's 'Property Brothers' and 'Love it or List It' shows tell you all you need to know about the mass hysteria that is the Canadian RE market.
Too bad it's hard to find a good short...a fortune could be made betting against it, like betting against Lehman and Countrywide and IndyMac in the U.S. In 2007/08. (Any good short ideas would be appreciated)
Here's what's on Australian television:
- Grand Designs Revisited
- Homes Under the Hammer
- The Block
- Under The Hammer (yes, a different show)
- Flip Men
- Escape to the Country
- Domestic Blitz
- House Rules
- Better Homes and Gardens
- Australias Best Houses
Sure, it's great to build houses, but you have to experience discontent with it after only a few years, so you've just GOT to renovate it and sell it!
http://pagead2.googlesyndication.com/simgad/9040772788343187587
Just compare housing prices with the planet Australia orbiting a parallel Universe.Who is the winner.
Canada has much similarities with Finland. Housing bubble has grown constantly since 2005, almost 10 years!!!!
I think it can go rolling another 10 years? Huge profits
They can hear us through the walls.
They must be afraid of leaving.
Canada is physically a large country, but their entire population isn't even 2/3's the state of California's population, so it's not hard to see how a few hunded thousand mainland migrants plowing money into Shangcouver and Toronto can sway the market. That said, I find it not more than a little hyperbolic to allege mainland shopping spree is having a more noticeable affect on Canada than Hong Kong. Puhlease.
plenty of businesses leaving tax happy Illinois. Travel around Ohare airport in the commercial and industrial neighborhoods and look at all the vacant properties. I have a good indicator as well. The 6 to 8 K a month billboards that are advertising themselves for rent. They may be more these days but I rented them in the late 90's early 2000's. In the land of tall billboards empty ones is a pretty good economic indicator. There must be a pretty good markup in the girlie bar business as those seem to advertise all year around. Come June the fireworks stores will rent dozens for a couple months too.
The average level of income and the level of living standards in Canada are higher. Maybe the reason is that the heads of financial institutions don’t influence the government policy. Besides, people have enough work and earn enough money to easily afford living expenses. Over against I hear that people more and more often use payday loans online because lack of cash.