New Home Prices Are Over 50% Higher In Canada Than The US

Tyler Durden's picture

Authored by Kaitlin Last via BetterDwelling.com,

The price of new homes is quickly diverging in Canada and the US.

 Data from the Canadian Housing and Mortgage Corporation (CMHC) show that new homes are selling for substantially more than the same time last year.

 

Meanwhile south of the border, data from the US Bureau of Census show that new home prices are on the decline.

This has lead to an even wider gap between the average price of a new home in Canada and the US.

Canadian New Construction Is Higher

The price of a new home across Canada is up for the second month in a row. The average sale price in April was CA$751,881 (US$559,123). This represents an 11% increase from the same time last year, when measured in Canadian dollars. When compared in US dollars, that increase drops to a much more conservative 2.64%. Even after factoring in the loonie’s decreased buying power in Canada, new home prices still climbed.

US New Construction Is Lower

American new home builders aren’t seeing such steep climbs in sale prices. Actually, they aren’t seeing climbs at all. The average price of a new home in the US was CA$495,271 (US$368,300). This represents a 3% decline from the same time last year, when measured in US dollars. In Canadian dollars, this was a 0.49% decline from the same time last year. Both forms of measurement show declining home prices in the US, curious since their economy is in a much better state than Canada right now.

US Vs. Canadian Prices

New homes are trading at substantially higher values in Canada than the US in April. The average new home in April 2017 was 51% higher in Canada than the US. The same time last year, prices in Canada were only 36% higher. It appears in a post-crash United States, new home buyers are taking much more conservative strides. In a hasn’t-crashed-in-decades Canada, new home buyers are optimistic about future values.

The gap between new home sale prices in Canada and the US is growing substantially. The US is a country with a booming economy, almost 10 times the population of Canada, and less land mass. Somehow, new home prices in the US are dropping compared to the same time last year. In sparsely populated Canada, prices are increasing – despite the precarious position of our economy.

Are Americans being overly cautious on homeownership, or are Canadians demonstrating irrational exuberance for homeownership, much like the US did in a pre-2006 America? Tell us your thoughts in the comments.

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bobdobolina's picture

whats the source for canadian housing data? Be curious to take a look and see if would implement that on their site

Laowei Gweilo's picture

it's a backward looking index that adjusts for intangibles like number of schools in the area, which make it actually less volatile because part of the 'price' of the index essentially reflects intrisnic value rather than the actual selling price.

at best it's a weighted average of 'value' not price over the last 3 months, at worst over the last 6-9 months

it's probably only within an error margin of 10-20% but it's really no more accurate than that of reflecting the actual SELLING PRICE of properties over that period.

in realility, the prices actually probably went a fair bit here than that chart, and were a bit lower coming into spring (not really sure about today... Vancouver has been rebounding but it's a lot more segmented into condos.... high end volume has still dried up. condo market at anything 'decently' priced for the city though is still crazy)

knukles's picture

Yeah, well just you wait until the "menials" start saving to buy McMansions.
They haven't?
So dat's foreign money den, eh?

Joe Trader's picture

Foreign money, corrupt banks/politicians, and Agenda 21 - forcing people to live in condos by driving up costs for detached suburban homes, through zoning policies and the government defunding infrastructure in new suburban areas.

asteroids's picture

That chart only goes to 2015. Its very out of date. Prices in 2017 are crazy expensive.

pitz's picture

Canadian prices peaked in 2013.

Harbourcity's picture

They're back on baby!  2017 is 20-30% higher over 2016.

pitz's picture

Nope.  Not on identical housing.

quesnay's picture

Based on what? Show me the data? Oh right, you don't have any and you claim all the official data is fake. If all the data is fake and you don't have any data yourself, how did you come to your conclusion in the first place?

pitz's picture

"official" data only speaks to Realtor transactional averages, not prices on individual identical houses without re-investment beyond routine maintenance.    The "official" data has been heavily influenced by a large change to the transactional mix.

quesnay's picture

So what data do you use? Post a link. I assume you made all this up out of thin air. Prove me wrong. Post a link to a reputable source that shows land price, or price per square foot, or whatever data you what that supports your theory that shows that in Vancouver, and Toronto land-prices peaked in 2013 and all gains are due to building bigger houses, etc. Prove you didn't just fabricate this theory out of thin air.

Stuck on Zero's picture

Canadian homes must cost more because of all the insulation.

quesnay's picture

They should all be cheap since they're just made out of snow ...

The Real Tony's picture

The builders raise their prices each day or each week and every Chinaman is more than happy to pay it since it freezes out the last of what's left of the local Canadians.

Laowei Gweilo's picture

Chart goes to April 2017

it's also important to look at the CAD chart cuz the US chart masks the value decline with currency changes

Consuelo's picture
"New Home Prices Are Over 50% Higher In Canada Than The US"

Well what the Hell then --- let's get $$$crackin' Yanks...!!!    

Gregor Samsa's picture

Canada is running out of land! Buy now or be priced out forever on your own slice of tundra!!

Joe Trader's picture

Government property zoning regulations, effectively create an artificial lack of supply of land for detached homes in suburban neighborhoods.

It's a real-life consequence of Agenda 21. Your municipal government likely has compliance meetings with representatives from the U.N. You could say good bye to self-governance a long time ago - case in point being bike lanes. Not only are they being forced on North American cities - remote parts of Eastern Europe are also forcing through bike lanes.

Not to bore anyone but I'm just getting started. The more familiar you are with Agenda 21, the more outrageous it is.

CADastrophic's picture

To be fair, most of Canada is uninhabitable frozen wasteland. But even with the smaller space I cannot believe that Canadians can actually afford to buy these houses. A couple of years ago the official Canada youth unemployment numbers were somewhere along the lines of a third world country like Turkey. So it's safe to say that millennial Canadians aren't the ones buying the property.

cesar's picture

Its also mosquito infested (not to mention the black fly - that's a whole other discussion). This is never mention to prospective immigranst - that's why they come here.

The Real Tony's picture

Winnipeg or what the locals call WinniPIG.

The Real Tony's picture

That may be true but if we shipped every Chinaman from Toronto up to Iceland the average igloo would go up in price just like the bitcoin price did from its inception to now.

CRM114's picture

Where I am, old homes under $110,000 are selling in one or two days, way faster then ever before, and new ones are going up much faster, all over $300,000. Nothing is moving in the middle. Most people in normal work can't get a mortgage for anything more than an old, cheap box. The wealthy however can pay almost anything. There's very little in the middle any more.

What's also happened is that in the last year or so it has become far harder to be an owner builder. It's effectively been regulated into impossibility - BC is the worst. The contractors can therefore charge what they like.

pitz's picture

Plenty of owner builders in BC.  You are spouting nonsense.

The Real Tony's picture

To find homes like that in Canada you have to speak French.

pitz's picture

Its not really as bad as implied.  Since the apex of Canadian housing prices in 2013, basically most transactions have been of higher-end houses, not the more normal mix that transacted prior.  So much of the alleged "price increases" have been due to the sales mix, and not due to individual identical houses going up.  Especially in Toronto/Vancouver where there is a significant bifurcation between low end and high end.

Having said that, Canadian housing ,even at 2013 apex prices, is still a bubble and needs to fall dramatically.  Financiers, like HCG, that have delusions of price increases in the post-2013 apex era are having their funding removed.

Herdee's picture

It's all the money coming out of China, India and others. Canada lets in lots of wealthy immigrants in different programs.

pitz's picture

Little to no evidence of foreign involvement, let alone "foreign money" in Canada's RE marketplace.  However, there are lots of "landlord families" originally from places like India who have hoarded significant number of properties and have a vested interest in creating a false narrative of price appreciation to keep their mini-empires alive and lenders rolling their mortgages over. 

 

Most immigrants who come to Canada can barely afford much more than a used Honda and a housing rental down-payment.  The myth of the 'rich immigrant' is highly exxagerated.

quesnay's picture

He's delusional. He shows up on every single thread about Canadian real-estate. According to pitz, house prices peaked 4 years ago and all the statistics stating otherwise is a government conspiracy.

CADastrophic's picture

I would have agreed with you in the past, but now I am convinced that the Bank of Canada has done far more damage to the Canadian people than a bunch of shiny fu er dai students ever could have.

logicalman's picture

It's simpler and less parochial.

Banks have done far more damage to humanity than......

Funny, I can't think of anything.

cesar's picture

Yes Bank of Canada has badly fucked Canada with the zero rate policy for going on 9 years now. They are deathly afraid of raising rates even one quarter of one percent!

pitz's picture

The Canadian economy isn't strong enough to raise rates.  In fact, they probably will need to be lowered as RE prices continue to collapse.

The Real Tony's picture

It's actually only China, there were some rich punjabs going to Calgary many years ago but no more. The punjabs who emmigrate to southern Ontario end up in the basements of Brampton. Sadly Home Capital and the other shadow lenders have come under scrutiny so future mortgages in places like Brampton and Mississauga will be next to impossible. This means the immigrants will be pitching tents in the backyards of the houses in Brampton instead of living in the basements.

FractionalPonzification's picture

Not sure about the exact figures but homes in Australia are similarly massively overpriced as compared to U.S. 

The Real Tony's picture

The Chinks sure did a number on Australia and New Zealand. It didn't take long since both places are basically land locked. In Canada the builders raise their price each day or each week and are greeted by the Chinese with a big smile. The aim of the Chinaman is to freeze each and every local Canadian out of the housing market.

sirsmokum's picture

Canada is twice as _______ as America is.

logicalman's picture

Canada os twice as BIG as America is - slightly more than, in fact.

TradingTroll's picture

Building materials in Canada are, in many cases, more than double the US.

2_legs_bahhhhhd's picture

Stop trying to apply logic, facts will not change the narrative. Tyler's and their busload of spambots will tell you what to think. Everything is double the fucking price in Canada ....50 years of progressive socialism rots from the inside out.

quesnay's picture

I doubt it, but if they are then why? Please explain.

HollyMeow's picture

You want to talk about Canadian house prices? Go to a reliable data source: Teranet – National Bank National Composite House Price Index ™

pitz's picture

Teranet lags years behind reality due to the methodology of their calculations. 

Byebyebrownie's picture

These prices are 100% the result of money launders from china. It will end badly.