Canadian Home Sales Crash In June

The Canadian Real Estate Association says home sales in June posted their largest monthly drop since 2010, with the Greater Toronto market leading the decline.

This is the third monthly decline in a row...

 

Under the covers, it's Toronto that is suffering the most...

Toronto existing home sales drop 37.7% y/y

  • Average Toronto existing home price fell 5.8% m/m
  • Average Toronto existing home price up 6.3% y/y

Vancouver existing home sales drop 12.2% y/y

  • Average Vancouver existing home price fell 3.2% m/m
  • Average Vancouver existing home price up 2.7% y/y

And as a reminder, there appears to be plenty of room for this to fall further...

 

Looking at the chart above, last month Bloomberg said:

 
 

On a real basis, Canadian housing prices experienced a much smaller, shorter decrease in prices during the financial crisis and a much larger, longer increase in prices during the recovery. When you couple this unfathomable rise in housing prices with near-record high household debt-to-income ratios, the Canadian housing bubble starts to look scary should the tide turn.

... and added:

 
 

No one knows when insanity like this will come to an end. Bubbles are like an avalanche. The longer they build up, the worse they will be when they eventually destabilize.

Well, nobody may know, but as Harley Bassman said yesterday, one can make an educated assumption, and as he said it most likely will be the result of higher rates... which reminds us of last week's decision by the Bank of Canada to hike its rates for only the first time since 2010.

And as US homebuyers from the time period 2004-2006 remember all too vividly, there is nothing that will burst a housing bubble faster than a spike in mortgage rates.

Which is why while Torsten Slok's original warning that "Canada Is In Serious Trouble" two years ago may have been premature, this time it appears all too real thanks to none other than the Canadian central bank, which may just have done the one thing that will finally burst the country's gargantuan housing bubble.

Finally, for those skeptical, here is David Rosenberg explaining why he is 'skeptical' about BoC's view of a robust economy ahead...

Comments

Barry McBear D Nyle Mon, 07/17/2017 - 11:10 Permalink

D Nyle - Unless you live up here, you can't truly appreciate the degree of liberal cuckery that takes place.  Imagine a world of only CNN and it's viewers.  That's what it's like living in Toronto.  But you're wrong about the liberal douches lying, they truly believe that Canada is a special snowflake that despite: the 13% sales tax on everything, income taxes approaching 50%, horrific 2nd world at best health with huge wait times, the 8 months a year of winter, the third world sub-80 IQs we let in en masse to enhance our culture... that our insane housing prices are justified and fair.  I get looked at like a crazy person for suggesting otherwise.

In reply to by D Nyle

Sector Catalyst Barry McBear Mon, 07/17/2017 - 12:26 Permalink

Can confirm.  The normalcy bias exhibited by Cuckadians makes you wanna fucking throw-up and very few seem to question anything of material importance politically or economically even though being spit-roasted between the government and banks.  Canada is becoming on par with Sweden in many ways.  Couple this with the latest federal government program to accelerate the on-boarding of "highly skilled foreign workers" a lá the US H1-B visa program; which is essentially a cost savings for business and disenfranchises REAL Canadians looking for work, and keeping their work.  What could possibly go wrong with this Hindenberg Omen looming?

In reply to by Barry McBear

Killdo Sector Catalyst Mon, 07/17/2017 - 13:21 Permalink

that's why they like to import people from much poorer countries - to increase the proportion of slavishly obedient sheeple. the same reason why Americans like to have illegal immigrants from Mexico - to do all the hard work for next to nothing  (while remaining slawish to their crony capitalist employers due to their lack of rights). I've seen the same attitude in Investment Firms in LA - they bring in bright students from abroad after graduation , but never want to sponsor them for the green card (to keep them obedient, poorly paid and in fear of deportation)It's an old psychopathic trick

In reply to by Sector Catalyst

armageddon addahere D Nyle Mon, 07/17/2017 - 15:36 Permalink

And I have been listening to American pundits saying the Canadian real estate market is crashing or will start to crash next week. For NINE LONG YEARS so far. They will be right eventually. There will be a 10% pullback that lasts 3 months and they will break their arms patting themselves on the back. Is this it?

In reply to by D Nyle

nope-1004 GUS100CORRINA Mon, 07/17/2017 - 10:52 Permalink

Buffett is a crony capitalist with deep ties to .gov.  He's not interested in making money anymore, as he has billions.  He's now retained by .gov to keep the illusion alive, bailing out financial institutions.Buying assets for pennies on the dollar assumes the asset intrinsically is worth dollars.  In this case, no.  Housing is way over-valued. 

In reply to by GUS100CORRINA

armageddon addahere nope-1004 Mon, 07/17/2017 - 15:44 Permalink

Not interested in making money? This is a guy who started hustling newspaper routes at 10 years old when his father was a congressman in Washington. All he has ever been interested in is money. He could have retired 40 years ago but what for? He enjoys squeezing the mugs more than anything else in the world. Somewhere there's a 300 pound guy in a Champion mobile home drinking a Coke who contributes half his income to Warren's companies and never even heard of him. His latest acquisition, a sleazy subprime mortgage lender, extends another tentacle  into Canada.

In reply to by nope-1004

nope-1004 skbull44 Mon, 07/17/2017 - 10:38 Permalink

That is simply a result of cheap credit.  Builders don't acknowledge the mere thought of rates going above 5%.  This is no different than those ghost ciites China built.  Cheap credit from a debauched currency always flows toward irrelevant projects because as a builder or developer with access to cheap credit, you don't need a buyer, just a lender with low rates.  As long as you can finance the cheap loan, who cares if sales slide a bit.  And the banks are complicit in this because they see developers as customers, so credit continues to flow.This is going to be painful for MANY people.

In reply to by skbull44

CPL spanish inquisition Mon, 07/17/2017 - 10:24 Permalink

Yup, and It's a little more nasty than that if anyone bothered looking at the age based demographics and who actually has savings here (not anyone under 50, that's for damn sure), but in the meanwhile keep watching.  This is the instant replay of the late 80's/early 90's, except with 19000% more debt.  It's going to be fucking horrible for anyone that owns a home and CMHC/Shared Services Canada - PWGSC (SSC - PWGSC did something very stupid a couple of years ago which will be apparent once the big show starts) are going to be the most hated organizations in this country for decades once the obvious math of the demographics catches up. Unlike most nations, Canada's demographics look like a Turnip.  VERY fat on top and too skinny on the bottom to matter long tem.  In a fiat pyramid scheme, Canada is way beyond fucked financially and it's why there's really nothing to do but wait for the obvious outcome.  I'm bullish tar and feathers.In the meanwhile come chant the mantra to change the world in four easy steps:

Die Janet Yellen, die.Die Lael Brainard, die.Die Gary Cohen, die.Die Jamie Diamond, die.

In reply to by spanish inquisition

CPL Canadian Dirtlump Mon, 07/17/2017 - 13:22 Permalink

Don't remind me.  We've got a quasi-retarded primary grade school teacher running a nation with no experience managing anything more than a Photo OP of a pride parade or eating paste.  Trudeau is going to get eaten ass up over the next four years, get screwed by everyone because he's fresh meat and probably destroy all the liberal party's credibility forever.  Then again you have to understand the plan here.He was selected to be an example of failure.

In reply to by Canadian Dirtlump

CPL GuyBaker76 Mon, 07/17/2017 - 15:39 Permalink

They are all communists.  You know how everyone can tell?  They've all got a central bank.  It's the single identifying feature of a communist regime and people still like to pretend there is 'business' in the fortune 500....even though all profits are managed by central economic boards that are extensions of the central bank.

In reply to by GuyBaker76

Temporalist CPL Mon, 07/17/2017 - 15:04 Permalink

Much of the global population is getting older as life expectancy has increased in most modern countries to near 80 (Japan, Europe, Americas - slightly lower). Obviously these stresses on the population via competition for employment, consumption, medical care, housing, transportation, etc are increasing as well. The only real good solution is offworld colonization. The sooner we can move snowflakes to Maxine Waters' planet Fucktard the better.

In reply to by CPL

Barry McBear me123me Mon, 07/17/2017 - 11:18 Permalink

Toronto slapped them with a foreign buyers tax so Ottawa is their target now apparently.  Up 9%.Clearly none of the Chinese criminals have actually been to Ottawa, they just see wikipedia say it's the capital of Canada and think it must be nice.  It's like buying in Albany because it's the "capital of New York".  Ottawa is the closest thing to hell on earth this side of Aleppo.Idiots, pure and simple.http://www.cbc.ca/news/canada/ottawa/ottawa-real-estate-market-board-pr…

In reply to by me123me

Burltron Barry McBear Mon, 07/17/2017 - 12:40 Permalink

Ottawa is the closest thing to hell on Earth since Aleppo?!? I live here. I'd prefer to live somewhere else but I have a decent job here. There are few homeless, potholes are taken care of, landscaping around the city is very nice, good schools, pro sports teams, rivers, parks and waterways. What the fuck are you talking about? Have you seen Aleppo?Edit: please downvote me all you want but the exaggerations on these boards are worst than what would come from a teenage boy talking about girls he's been with. Embarrassing.

In reply to by Barry McBear

Abapom Mon, 07/17/2017 - 10:06 Permalink

In Ontario Province of Canada where 10 milion people live(out of 32 mil canadinas) 47 cents of each Dollar collected from taxes goes to:Drumroll...Pensions and payroll of Public Sector unions... NOT to concrete and rebars for pavements etc...this makes everyone buying Ontario Bonds - an IDIOT!