Despite Bank Of Canada Hubris, Existing Home Sales Crash In May

The Bank of Canada is stuck between the rock of a housing bubble (textbook-based trickle-down confidence-inspiration) and a hard place of a housing bubble (total lack of affordability) as it proclaimed this week that it may withdraw stimulus because, paraphrasing, everything was awesome. Well, today's existing home sales collapse may change that tune quickly...

Bloomberg reports that in a speech she’s delivering in Winnipeg, Manitoba, Senior Deputy Governor Carolyn Wilkins highlighted how the nation’s recovery is broadening across regions and sectors, giving policy makers “reason to be encouraged.”

 
 

“As growth continues and, ideally, broadens further, Governing Council will be assessing whether all of the considerable monetary policy stimulus presently in place is still required,” Wilkins said in the text of a speech she’s giving Monday.

 

“At present, there is significant monetary policy stimulus in the system.”

 

"The adjustment to lower oil prices is now largely behind us, and we are looking for signs that the sources of growth are broadening across sectors and regions,” Wilkins said. “The signs are encouraging.”

Well, wih the worst print on record, Canada existing home sales crashed 6.2% MoM in May...

 

"The signs are less encouraging now"

Below we again put Canada's housing market, and bubble, in perspective with some of our favorite charts, first showing total Canadian household debt compared to the US. Most of this is in the form of mortgages.

Next, despite Canada's low rates, the debt service ratio of an average Canadian household is nearly 40% higher than when compared to the US.

And finally, the punchline: indexed home prices in Canada compared to the US. This needs to commentary.

This won't end well... and as this month's home sales data shows, the pain is just beginning.

Comments

HonoraryCarioca charlewar Fri, 06/16/2017 - 01:43 Permalink

But remember who Trudeax serves. The elites, Israel and Mossad/CIA/MI6 have fermented this anti-Muslim sentiment through false flag attacks and excessive immigration in order to encourage regional conflict (i.e. weaken its neighbors) and further expand Israeli influence. Every time we repeat anti-Muslim rhetoric we are furthering the Zionists agenda. 

In reply to by charlewar

johngaltfla Thu, 06/15/2017 - 09:17 Permalink

Well the Canuckistanis quit buying in Florida thus the glut of condos in Miami and now building up on the West Coast. When Toronto and Vancouver rolls over it will generate a shitstorm of unreal proportions.

Defiated johngaltfla Thu, 06/15/2017 - 10:36 Permalink

....maybe the 'old folks'....I continue to 'rent' in Southern 'So-Cal'.....meaning Pacific Mexico....waterfront '4 star' hotel....$67 CDN/nightAll the beautiful weather WITHOUT the 'high prices','mericans, and paranoid border guards....Where Exactly?...sorry, its a secret..You love your America  .... you can keep your America!!!!

In reply to by johngaltfla

TheSilentMajority Thu, 06/15/2017 - 09:28 Permalink

Short-term volume decline noise does not equate to any significant/prolonged price decline eh.

It is very easy to circumvent the annoying foreign buyers taxes eh.

Usually takes a few weeks for the market to figure that out eh.

chubbar Thu, 06/15/2017 - 09:36 Permalink

What is interesting to me is that we've now seen 2 head bankers come out trying to tell everyone that the economy is doing great when every frickin metric is telling us the opposite.This "who are you going to believe, me or your lying eyes" strategy seems desperate and insane. Raising rates into what appears to be a massive economic slowdown can only exacerbate the stall. This is intentional, pretty clear these folks are making damn sure the crash comes on schedule, whatever that timeframe is.

asteroids Thu, 06/15/2017 - 09:46 Permalink

The typical Canadian is loaded up to the eyeballs with debt. Should the FED continue to raise rates, the typical Canadian is sunk. A lot of interest rates in Canada are determined in New York and not Toronto.

peterk Thu, 06/15/2017 - 10:42 Permalink

only a  spike in EURODOLLAR rates wil send this  global property bubble  down.else its more of the same.... up she goes. Eurodollar  lately sideways to up.. but only justdont get me wrong, i want  it to crash and burn.

PeeramidIdeologies Thu, 06/15/2017 - 10:54 Permalink

Poloz has been eating his own words for 6 months now. The situation in Canada is thoroughly out of hand, and I personally could careless.

Everyone in this country has their head in the clouds. I shit you not, people feel completely untouchable up here.

Charming Anarchist Thu, 06/15/2017 - 11:50 Permalink

No. 37431 - May 4, 2017

Coram: McLachlin C.J. and Abella, Moldaver, Karakatsanis, Wagner, Gascon, Côté, Brown and Rowe

BETWEEN:

Committee for Monetary and Economic Reform (“COMER”), William Krehm and Ann Emmett
Applicants
-
and
-
Her Majesty the Queen, Minister of Finance, Minister of National Revenue, Bank of Canada and Attorney General of Canada
Respondents

JUDGMENT
The request for an oral hearing is dismissed.
The application for leave to appeal from the judgment of the Federal Court of Appeal, Number A-76-16, 2016 FCA 312, dated December 7, 2016, is dismissed with costs.

https://www.canlii.org/fr/ca/csc-a/doc/2017/2017canlii25790/2017canlii2…

taketheredpill Thu, 06/15/2017 - 13:28 Permalink

  I assume the drop in Sales was mainly due to Toronto after Ontario introduced a foreign buyers tax similar to the one Vancouver did in 2016.The B.C. tax knocked prices down for a few months, then it all started up again as the price-indifferent buyers rushed back in.i think only a Chinese implosion (and currency collapse) wil kill this beast.

issimo Thu, 06/15/2017 - 15:26 Permalink

It's 1989 all over again. In late 1989, the unemployment rate in Toronto was under 4%. A short 18 months later, in early 1991, it was over 12%, almost entirely due to a collapsing housing bubble.  This time, no one will have any leverage left to buy at the bottom, which will just keep dropping...and dropping...and dropping.  Poloz is no doubt well aware of all of this.  His policy is all about trying to avoid future blame for what may turn out to be a short-term economic catastrophe, especially in Toronto.

chickadee Thu, 06/15/2017 - 18:13 Permalink

Poloz was so busy playing currency wars that the housing bubble must have been insignificant to him. He has nobody else to blame but himself. I'm sure his staff are worried about it.