Housing Bubble in Canada?

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#1 Tue, Jun 14, 2011 - 8:55pm
Hi Rez Jack
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Housing Bubble in Canada?

Housing prices are at an ALL.TIME.HIGH. in Canada right now. Some fun stats:

  • 70% home ownership in Canada
  • average single family home price in Vancouver = 11 times the median household income.
  • average single family home price in Toronto = 9 times median household income.
  • Canadian economy is not booming
  • jobs are not growing 
  • incomes have become stagnant

Mainstream response when asked if there's a bubble: "Absolutely not!! Its different here!"

When I see a 1 bedroom shack sell for $2.3 million in Vancouver and know that driving half an hour south to the US the same property could be purchased for $50K, a red-flag goes off for me. 

Edited by: Hi Rez Jack on Nov 8, 2014 - 5:07am
Tue, Jun 14, 2011 - 9:15pm
hedgedhog
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It is different here. Our

It is different here. Our superior real estate/tax rape/ banking sector operates with the knowledge that mortgage risk is socialized before crises, and so our bubble will burst rapidly and ruthlessly when confidence is lost not in the banking sector, but in the sovereign debt market. Much different here.

Tue, Jun 14, 2011 - 9:21pm
Mike
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Housing all time high in Sweden as well

In fact they have skyrocketed since our last bubble popped in the early 1990´s.

I sold 2009 and put all proceeds into silver and gold assets.

Soon the bubble will probably pop again. I think a lot of people are going to be hurt financially cause they think housing prices only can go up. Well that is not true and since it´s only 20 years since the last crash they should know better.

A prudent man foresees the difficulties ahead and prepares for them; the simpleton goes blindly on and suffers the consequences. Proverbs 22:3
Tue, Jun 14, 2011 - 9:26pm (Reply to #2)
JoeyJoeJoe
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Re:

I'm not sure what's the case in Toronto, but I know the housing in Vancouver is skyrocketing in large part due to foreign investment (i.e. from Asians). There was a stat released not too long ago about how homes > $1M in Vancouver doubled in a year or something like that?

If you look at the housing in Vancouver as a "chart", I would say that it wouldn't be an absolute "free fall" if the bubble bursts, namely because I know people who cannot afford or are not willing to purchase a home in Vancouver at these prices, so in that sense, you have some threshold below current prices as a "support" level. Many people still consider Vancouver to be one of the best places to live - should the price in housing drop significantly, I'd expect them to be all over that market.

Tue, Jun 14, 2011 - 9:29pm (Reply to #4)
hedgedhog
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real estate rollercoaster

https://www.zerohedge.com/article/vancouver-real-estate-market-rollercoaster

in case anyone missed it. "housing bubbles hurt families" lol.

Tue, Jun 14, 2011 - 10:22pm
Nigel Black
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Unfortunately, we Canadians

Unfortunately, we Canadians have developed a "holy than thou" attitude... more specifically, what happened in the USA won't happen here.

Yeah, right. Our banks are more responsible. Yeah, right.

They have mega derivative exposure and Canadians have taken on record debt (that is not including their mortgages). This evening on the CBC, they even talked about how many Canadians (lower income and seniors) are taking on additional debt just to buy the basics and survive.

The Canadian economy will eventually implode - especially if/when our cousins to the south experience another economic meltdown. It is just a matter of time.

Tue, Jun 14, 2011 - 10:36pm
caramel
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look at the % of household

look at the % of household income towards mortgage/taxes/insurance. Historically around 35%, now around 60-65%, BC probably closer to 70%.

That is unsustainable - requires lower interest rates, low UE & decent wages. One or more of these will give.

Wed, Jun 15, 2011 - 12:03am
Jappleseed911
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Classic case of the

Classic case of the demographics of San Marino, CA and some areas of the San Gabriel Valley, California translated to Canada.

It will be interesting to see the phenomenon of "parachute kids" develop in Canada where mommy and daddy are back in Taiwan, Shanghai, or Korea running the factory and living the life they know while the kids are left with an elderly caretaker.

Future pillars of society.

Wed, Jun 15, 2011 - 1:39am
surfeitndearth
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Canadian banksters

h/t Economic Analyst - March 2011

Royal Bank ($624 billion assets) ; $4.8 trillion total derivatives ; $4.3 trillion OTC derivatives TD ($432 billion assets) ; $2.4 trillion total derivatives ; $2.1 trillion OTC derivatives BMO ($387 billion assets) ; $2.7 trillion total derivatives ; $2.0 trillion OTC derivatives Scotiabank ($429 billion assets) ; $1.3 trillion total derivatives ; $1.2 trillion OTC derivatives CIBC ($344 billion assets) ; $1.2 trillion total derivatives ; $1.1 trillion OTC derivatives

Only the small secrets need to be protected. The big ones are kept secret by public incredulity. - Marshall McLuhan

Wed, Jun 15, 2011 - 4:01am (Reply to #9)
Breaker
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That is some amazing stats

That is some amazing stats you've got. I've been telling everyone I know (fallen on deaf ears) how bad it will be. I never knew that about the big five banks though.

I really believe that if people knew the source of mortgage lending funding they'd be more inclined to believe me. Sadly we're going to experience our own pop.

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