The Most Splendid Housing Bubbles in Canada: Even the Bank of Canada Gets Nervous and Tapers

House prices in the largest markets have gone nuts amid “extrapolative expectations and speculative behavior,” as the Bank of Canada put it.

By Wolf Richter for WOLF STREET.

The first thing to know about the housing bubble in Canada is what the Bank of Canada has been doing, after its furious bout of QE: In October last year, it tapered purchases of Government of Canada bonds by one notch and also ended buying mortgage-backed securities. In March, it started unwinding its liquidity facilities, citing “moral hazard” as reason. In April, it tapered by another notch its purchases of Government of Canada bonds, citing “signs of extrapolative expectations and speculative behavior” in the housing market.

The assets on its balance sheet have now dropped from C$575 billion in March, to C$478 billion as of May 12:

House prices have truly gone nuts.

In the Greater Toronto Area (GTA), house prices spiked by 3.0% in April from March, and by 12.3% year-over-year, and have nearly tripled over the past 15 years, according to the Teranet-National Bank House Price Index today.

The index tracks prices of single-family houses through “sales pairs,” similar to the Case-Shiller Home Price Index in the US, comparing the price of a house that sold in the current month to the price of the same house when it sold previously, often years earlier. By tracking how many more Canadian dollars it takes to buy the same house over time, the index is a measure of house price inflation.

In Greater Vancouver, house prices jumped by 2.0% in April from March and are up 9.4% year-over-year. The Bank of Canada’s pandemic magic has completely turned around the housing bust that had started in mid-2018. The index has more than tripled in 15 years:

In Hamilton, Ontario, house prices spiked by 2.8% for the month and by a blistering 22.9% year-over-year. Obviously, an exponential increase like this is begging to be knocked over by a central bank worried about “extrapolative expectations and speculative behavior” in the housing market:

In Victoria, house prices jumped 2.0% in April and 12.3% year-over-year. While in Toronto, Vancouver, and Hamilton, house prices more than tripled (+200%) since January 2006, in Victoria they soared by “only” 138%.

All charts below are on the same scale as those of Toronto, Vancouver, and Hamilton to show how large the house price increases were in each metro compared to the other metros. As we go down the list, the white space gets larger.

In Winnipeg, house prices jumped 1.9% for the month and 8.8% year-over-year, and are up 127% since January 2006:

In Montreal, house prices jumped 1.5% for the month and a red-hot 15.9% year-over-year. They’re up 123% from January 2006:

In Ottawa, house prices spiked by 2.8% for the month and by 19.5% year-over-year.

In Halifax, hang on to your seat, house prices spiked 5.4% in April from March, by 26.8% year-over-year, and by 40% in two years:

In Quebec City, house prices rose 1.2% in April and 9.1% year-over-year. They have just about doubled in 15 years.

Calgary and Edmonton, the remaining two cities in the Teranet-National Bank House Price Index, are long-term oil-bust epicenters. In Calgary, house prices just eked past the oil-boom peak of 2007; and in Edmonton, house prices are still below the oil-boom peak of 2007. Both of them would be a little out of place on this list of the most splendid housing bubbles in Canada.

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  132 comments for “The Most Splendid Housing Bubbles in Canada: Even the Bank of Canada Gets Nervous and Tapers

  1. Mike says:

    The Vancouver housing market makes sense to me. The weather is less terrible than the rest of Canada. If you are lucky, you can get 3months a year of OK summer.

    The rest of Canada makes no sense to me.

    My hunch is that Canada has money laundering laws on par with the worst third world countries and that’s where most of the money comes from.

    Maybe one day the USA will put the gears to the Canadian federal government and force them to close those loop holes, enforce the laws and freeze assets of the bad actors (I’ll keep dreaming)

    Somehow I doubt the market will ever go down so long as dirty money is welcomed with open arms.

    • Up North says:

      I can’t speak for money laundering.
      But depending on the area, we are basically pricing out the immigrants coming in flocks to Canada. The haven might change of quality: if you didn’t get in RE and weren’t in the market by 2010ish, you are roughly priced out now in Canada, unless you go to Winterpeg or other boonies.
      I think it’s mostly due interest rates, making any leverage worth the bet.
      Pensioners of today, your money is purposefully bring forced out of your accounts by artificial and sustained inflation.
      We bought our first home East GTA 2011. We tripled. Front neighbors selling: in 3 years they are getting about 30-40% return. Rather nuts.

    • nicko2 says:

      Outside the big three (or four) cities, Canadian RE is reasonable. Canada is a safehaven country now, there will never be a shortage of skilled migrants wanting to immegrate. Indeed, contrary to the US, immigration is a nonpartisan issue. Immgration rates to Canada are several magnitude higher than The US on a proportional basis. Also…..Canada has a very strong government fund social support system. It’s not perfect, it’s not a paradise….but it works, ad it’s creating long term posperity. Oh yea, it also helps the big Canadian banks are kept in a ‘walled garden’.

      • Sea Creature says:

        Yes, the immigration problem the US has is a bit different than what Canada has ever experienced. Canada is bordered only by the USA, so Canada (mostly) has control of who comes in, which is a very diverse group who for the most part adopt Canadian values, and for the most part, immigrate legally.

        The United States southern border has floods of people flowing in illegally from Central and South Americans pretty much uncontrolled every day. This has caused a wide variety of political problems and instability in the United States as a result, due to impacts of this on American culture, the economy, wages.

        To put perspective on this, by the governor of California’s own admission, 1 in 10 people in California are there illegally (and this is even after all the ‘amnesties’). Approximately 1 in 4 Mexicans have come across the border are now living in the United States (a bunch legally after all the ‘amnesties’, and the remaining still illegally). To put numbers on it, a Yale Insights study (google it, no links allowed here) states that there are around 22 million people are in the United States illegally.

        The population of all of Canada is what, about 33 million these days. Be happy the United States separates Canada from the rest of Central and South America. And be happy they are not all flooding into Canada (because if things in the USA continue to get worse, they will start to). 22 million illegals from south and central America would form the largest ethnic group in Canada and it would become a majority Spanish speaking country, and start to resemble central and south America in all its good and bad ways with respect to economy, governance..etc.

        So be careful not to gloat too much, Canada has been very lucky so far to not have to deal with this, so it is easy to gloat.

        P.S. I am also Canadian (merde! ;-) ) , but understand fully the problem the Americans are dealing with, having spent lots of time in the United States (legally) as well as in other countries where similar issues also persist.

        • MCH says:

          Hahahaha, the Canadian border control system is called the United States. That’s a good one.

        • Harrold says:

          You could replace Central and South America with Ireland and post that on Wolf’s retro 1850’s blog, The Wolfstreet Gazette.

        • NBay says:

          Very true, The “Gangs of New York” aside from being a good movie, showed the damage they did to the whole city, not just their own “ghetto”. I don’t think the Chicanos have been anywhere nearly as damaging as the now totally “American” Irish, who still have the “gall” to celebrate their own culture by having a parade on an Irish “special day” in the city they once tore the holy hell out of because they felt they were “treated unfairly” by the then “native” citizens.

      • JEFF13 says:

        You might be Canadians, but like many of our countrymates you seem disconnected from the economic reality. Great, now Hamilton is less affordable than LA and San Jose. And don’t even start on our new world-class city Halifax or even worse Oshawa

        Even more ridiculous is the claim about long term prosperity. You don’t create long term prosperity by inflating a real estate bubble. Ask Americans, Irish, Spaniards, Greeks, etc. The % of our GDP, which is directly and indirectly related to this massive real estate bubble is probably larger than all bubbles I have seen across the world in the last three decades.

      • RightNYer says:

        Except that Canada largely requires that immigrants have education and skills. It’s not an apples to apples comparison.

        • roddy6667 says:

          Canada is very picky about who enters, even as a tourist. If you have a DUI or breach of peace conviction, you are blocked at the border.

        • NBay says:

          Tell me about it Roddy!!!!!!!!!

          After visiting friends up there maybe 15+ times since ’63, I was refused entry near Bellingham ’06, after being questioned by a girl who obviously took delight in saying, “is that it? I said yes, and then she said, well what about?….. (even a conviction-less felony assault arrest) until we hit minor in possession of alcohol at age 18….they have EVERYTHING on ya). Truck was also completely searched during this time.
          Anyway, I then had to sit for 45 min while they “considered it” and then was refused, and given a paper to take to the US side. I was so pissed I couldn’t see straight, and the US side girl immediately said, “WE have NOTHING to do with what they do over there, don’t be mad at me”, having seen it all before.
          When I called friend’s in Black Creek, my first stop, his wife said “I was afraid of that, we should have met you at the border.”, but I don’t know if that would even help, because I do have 2 DUIs, and misdemeanor assault (a bar fight). But NO law run-ins that weren’t prior to the last few times I was up years ago!

          Oh well, several of them come down here a lot, and we even took a 2 trips over halfway down Baja in 2-3 car caravans, to a home rented, then to one they were building in Bahia Asuncion. All fun.

        • NBay says:

          In Oct 1980 I came up to Toronto for about 3 weeks to consult on a CO2 Laser. I found out the Canadian Government paid all my expenses plus my fee, not the guys company I was working with, because it was part of “importing a new technology…Laser engraved expensive desk widgets/plaques, etc…to Canada”. Had most all of my “nasty record” I described, but that was no problemo when doing that. Toronto is a nice city, lots of green belts, considering it is/was their LA……1 Canadian in 10 lived there then, so I was told.

        • RightNYer says:

          Nbay, what years were those convictions in?

        • NBay says:

          Lets put it this way, not so much as a parking ticket since 1985.

        • RightNYer says:

          Okay, yeah I agree that’s ridiculous. It’s clear that at one point, you had a problem with alcohol, and if it had been within the past 2-3 years, I would have understood their decision. But 21 years later is just silly.

        • NBay says:

          Right. My record was just their lame excuse. I was in a work truck with full lumber racks, tool chests, tools, and was set up to help a friend in Black Creek finish his shop/garage. Also had my dog. Think they figured I was a poor workman trying to sneak in forever…somehow. As I mentioned, there was absolutely no problem getting into Toronto (with bad record) to bring a new technology to Canada. I bet $1-2 M cash would have had the same effect.

          A flaw, to me, in a country I otherwise came to love. Even had a big Maple Leaf flag friends gave me flying under a CA State flag on big flag pole on my ridge top property before I sold it. One friend was sorta pissed “no American” flag. Just said I didn’t want one.

      • jon says:

        Most of the highly skilled immigrant would love to come to USA and may be Canada a second choice.
        I think Canada attracts a lot of refugees and I am sure they are loaded to buy these multi million dollar homes.

        At one point in time, I had to decide whether I want to migrate to USA or to Canada. I chose USA. Canada just didnt have good jobs available

      • Bjorn says:

        Real estate is not “reasonable” in any small town in Canada.
        My hometown, a 1 hour 20 minute flight north of vancouver in the far off boonies, has a C $400,000 avg home price. It has doubled in last 5 years. Same is true for every other town in BC.

    • Sparrow says:

      Canada definitely has a money laundering problem.

      Lax financial regulation combined with general international trust has led to what’s called “Snow washing”. Canada is increasingly seen as a safe place to do it. It’s unclear how much of that is tied into real estate, though. In theory, the current government has committed to try to make some moves against that and match some of the international norms to prevent the laundering, but only time will tell how serious or effective those efforts are, and how much real estate valuation is currently leaning on the snow washing.

    • Paulo says:

      Nothing like making a definitive comment on a ‘hunch’ :-)

      quote: My hunch is that Canada has money laundering laws on par with the worst third world countries and that’s where most of the money comes from.

      And you know this how?……

      And yes I am a Canada booster, but do so as someone born in the States with 1/2 my family still residing there. I know what we have here and treasure it mightily. Whatever, as they say.

      The housing bubble here does have a component of laundering as dubious actors look for places to flee or at least hide their money. Pretty simple math, where to hide or invest your money safely? But as someone with feet on the ground and a property owner for 45 years now, (a working man still buying property and building structures), this bubble surge is in direct relationship to low interest rates. The stampede is caused by , “How much can I afford to pay every month”?, and with these low rates there is not much restraint to this mindset. How do I know this? Well my son just bought his second home. He crunched the numbers that included renting out the upstairs of a house, building a basement suite for himself, and compared it to other housing options. He is 37 and the only laundering he does is his work clothes. Tenants? He rents to two single working women after dropping asking by $400 per month in order to accommodate what they could pay, not what the market would bear. He rents his main residence a friend of mine.

      I know all of his school friends…the same age. All working, all paying the monthly mortgage nut, all slowly building equity.

      As for immigration and housing, I think of my wife’s immediate relatives who just passed on, living in a ‘dugout’ in northern Alberta. No windows, but they plowed and planted the best they could. Or where I live, young men falling trees with a double bitted axe and a two-man crosscut saw, sometimes taking all day to drop just one. Hurt? Leaned back against a stump and taken down off the hill on the last load of the day. Housing? They lived in split cedar cabins. My retired logger tenant, who now lives in a nice little cottage with 200amp service and all the amenities, (fell trees for years using a stihl or husky) recounts his childhood in a cabin that used to stand where my driveway is; a one room shack that you could see out between the boards. For water they filled a 45 gallon drum with buckets from the river, quite an operation in flood. Those are some of our immigrants. Just like in your country. Very few arrivals either now or past are of criminal element, in either country. Most new arrivals don’t have any money to ‘launder’. They are just trying to build a life, and that usually includes trying to own a home. Incidentally, we resettle about 10X the number of refugees per capita than our southern neighbour.

      I was a little dismayed to read the snide personal attack down below. It doesn’t matter, because who knows anyone? It’s an internet blog on par with twitter, depending on moderation. But yesterday, Phoenix? was telling people what they could suck without any moderation. In the past several weeks, I have commented less and less trying to discern why the snarkiness was increasing on WS. The quips, one liners, Powellisms. And while many many of you folks will not agree with me or what I opine, I have always tried to do so in a reflective manner. My apologies if this has offended readers, certainly not intended to do so. But an article on Canada’s housing, why that’s red meat for this peon.

      Hey, have a great day. Regards.

      • Erle says:

        That is all well and good. I had a rather good house that I cut the rent to help them out. They didn’t pay that either so I had them evicted and sold it.
        Renting is iffy at best. I actually hand carried cash rent to the lord of the manor when I rented. How he accounted for it was none of my business, but contrary to me, at least he got paid.
        Do you in Canada have that crap of rent forbearance?

        • Erle says:

          BTW, those charts are shocking, and I do not use the word carelessly. I got a call from Toronto Dominion yesterday. I mentioned the Canada Bubble and told them to close my accounts.

    • Petunia says:


      I follow a Canadian guy on Utube who mostly talks about housing in the English speaking world. He posts published articles on his channel all the time on the topic of money laundering in Canada and how it distorts home prices. It is a real topic with real sources.

      This Utuber’s housing story is itself interesting. Four years ago he lived in Vancouver and could not afford a house with his meager C$260K down payment. He drove two hours out of the city, to a small town, and bought a very nice house for cash with the C$260K. In the few short years he has owned it it has doubled in price. Now all of his neighbors are Vancouver refugees.

      Nobody is trying to offend Canadians by exposing the truth and dynamics of the Canadian housing market. Your story is interesting as well, another angle of the story.

      • Artem says:

        Bank of Canada is definitely the largest money laundering operation in Canada, and arguably the most responsible for the excessive leverage and price appreciation in real estate.

      • roddy6667 says:

        Not owning a house is not the same thing as living in a cardboard box under a highway overpass. One can live a very comfortable life and save/invest for the future while renting. Getting into the home ownership game at the top of a bubble is a formula for financial failure.

        • NBay says:

          Yeah. Don’t have savings or income to even think about a house, but at my age, me and everyone else in this 250 unit hotel (interior hallways) style 3 story apt complex is extremely grateful for our 500 sq ft 1-2 person cheap linoleum, vinyl baseboard, indoor/outdoor carpet, paper wood veneer/particle board cabinets. (hey, we just upgraded and got handles on them, along with a more efficient fridge).

          Back when entry code was bldg #, and every pizza or whatever delivery guy knew it, one very cold night I came home 1am and homeless guy was sleeping in short 5 ft hallway, I just turned and went up steps to first floor and left the poor guy there. All doors have locks now. But it could have been me or anyone else here who couldn’t pay low income housing rent.

          VERY grateful.

      • FaithfulReader says:


        The “GreaterFool” website (www_greaterfool_ca) provides daily web entries about Canadian financial matters. There is no fee to read or post there. You may find certain sections about real estate interesting.

        Mr. Garth Turner is the original “GreaterFool” writer. He is arguably as generous and thoughtful in his way as Mr. Richter.


        “‘GreaterFool’ the blog is for educational purposes only. Information on this site is not intended to be construed as investment advice. The information and any statistical data contained herein have been obtained from sources which the author of this blog believes to be reliable.”

    • A says:

      If you this America is going to prevent people from money laundering through real estate then you’re going to be very surprised how our last President made his riches.

    • Robert says:

      @ Mike said –

      “My hunch is that Canada has money laundering laws on par with the worst third world countries and that’s where most of the money comes from. “

      As far as I know the United States has few controls on foreign money buying up real estate. I hear some law-makers squawking about this every now and then but as far as I know money laundering in the US real estate biz is pretty common. I would think Canada is similar in this regard.

      Correct me if the US policy has changed.

      • RightNYer says:

        I’ve been arguing for years that it’s obscene that we let foreigners buy up needed housing in NYC, San Francisco, Miami and other places.

        • roddy6667 says:

          If you pass laws against it, they will buy property through corporations that shield their identity. It is too easy to circumvent.

        • Robert says:

          Your local public officials only wants property taxes to go up. Gotta keep demand for housing high, which means letting everyone and anyone buy homes.

          House prices in my area in the northeast are up 20% over last year. I’m sure they’ll eventually do a reassessment and raise my taxes. Then of course housing prices will crash and I’ll have elevated taxes with nothing to show for it.

        • Synergy says:

          They should tax investors buying SFH higher than if it were owner occupied. Better yet get rid of income taxes for those making under $500K and tax real estate outside of primary home. You can’t hide real estate.

      • realesateguru says:

        Well then I guess you don’t know about FIRPTA.

        “FIRPTA is the Federal law, the Foreign Investors Real Property Tax Act. As of February 17, 2016 the Firpta withholding was increased from 10% to 15% of the Sale Price. However, the actual tax liability is based on the Capital Gains made on the sale of the property. So investors with a small Capital Gain on the property, will receive a larger refund, after filing taxes.”

        Individual states in the USA may also have laws and regs regarding taxes on sales of real estate by foreigners.

  2. Phoenix_Ikki says:

    Those darn Canadians, can’t even copy good Ol’ Murica and the almighty FED right…how dare they stop purchasing MBS when things are on the non-stop rocket up? Learn from the Powell, don’t ever stop those MBS and if there’s any dissent or concerns from the public just call it transitory or double speak and say something like I am concern about the market and at the same time pump more money to inflate it more.

  3. Nathan Dumbrowski says:

    It keeps me up at night to know that with great power comes great responsibility. Good to see Canada has begun to taper and the top chart shows that

    Sadly I think the panacea for any and all world or regional EVENTS will be to turn the financial faucets back on and to 11

  4. Miatadon says:

    Is this really surprising? Canada is a beautiful, peaceful, civilized place, especially compared to its southern neighbour. Similar to NZ, many people with means from all over the world want to live there. Adding to housing demand are Chinese buyers. As people in China gain wealth, having a home in a place like Canada is very appealing.

    • NoPrep says:

      Are you Paulo’s apprentice? Sounds like it. You just left out the part about how inferior the USA is. Pat on the back for the nice comment.

    • Turtle says:

      Do you live in Canada or did you just see the brochure? Fine country, no doubt but LOL if you think it’s so very different than the US culturally or economically. The overlap is astounding.

    • Petunia says:

      Canada is very appealing to Chinese buyers, but you failed to list the financial incentives for doing so. For the cost of a one bedroom condo, C$500K, you can get permanent residency in Canada. This buy-in will allow you to send your children to university for little to no money. That return alone is worth overpaying for a condo. The condo also comes with free medical care if you don’t work, and maybe even an on the dole subsidy.

      That C$500K condo pays for itself in no time if you exploit all the options. And by all accounts Chinese buyers are exploiting all the options.

      • nick kelly says:

        I knew we’d hear from you about Chinese. I live in central Vancouver Island, Nanaimo. As a result of an unfortunate but amicable separation we sold in August 2014 for 370. It would now be close to a million. Nanaimo has WAY outpaced Victoria, partly because Vic was already expensive and yes there are quite a few Chinese there and an attractive China town. There are few in Nanaimo. Albertans bought our house.

        The most violent real estate mania in history was the Great Florida Land Boom and Bust of the 20’s. often seen as a precursor to the 29 Crash. The Miami paper was the largest in the world due to ads. The main RE job was ‘binder boy’ getting a deposit to hold a lot while trying to resell it. This would happen multiple times with no party seeing the lot, which was often swamp. All done by ’round eyes’ with lots of Yankees.
        When the end came three years later a newspaper offered a free lot with a subscription. People asked if they had to take the lot.
        No Chinese cooking sauce needed for a mania, just greed.

        I don’t think one needs to diss the US to praise Canada, but the cultural overlap is far from total.
        Biggest SINGLE diff is probably guns, e.g. this ‘open carry’ crap. Other is the US obsession with politics: electing judges, sheriffs. prosecutors, librarians, dog catchers. There is a video of a judge in I believe Texas. of a judge working the room for campaign money at the annual lawyers’ bash. It makes Canadian ( or British) jaws drop but amazingly, it’s not a spy video, all present know about it.

        Here in BC we have two main parties with the Greens a new but small factor. After an election the winner forms a government in a parliament. If someone suggested creating another elected branch, we’d say, huh, why? To make sure that
        mob we elected doesn’t run amok? And then if someone suggested electing ONE person to ride herd on both via a veto, we’d think he was nuts. That’s a version of the Brit system circa 1790. Lower House, Upper House, Monarch.

        • Petunia says:


          Everybody in south FL knows the Miami skyline was built with drug money. America is no stranger to money laundering. In fact, one of the stories I read on Canadian money laundering was based on a report by the US State Dept, warning the Canadian govt. I guess we didn’t like the completion.

        • Petunia says:

          spell check error: meant competition not completion.

        • NBay says:

          Well said and likely the source of our biggest problems. No need for anyone to form any coalitions here, so Corp and Dynastic wealth (from older corp wealth, and also some old big landowner families, like within the individual States) money gives lobbyists the “vote” money buy government.

          1790 Brit model you say? No wonder the wealthy “Founding Fathers” turned Tom Paine’s name into dirt after he inspired all the peons to fight for them, by promising things would all be more “fair” afterwards.

      • Artem says:

        Just to clarify, you don’t need citizenship or permanent residency to get a free education and government perks in Canada? All that is required is to own a condo?

        • Petunia says:

          No you need to make a minimum investment in real estate or business to buy yourself residency. A lot of countries do this, including the US.

    • Gian says:

      Canadians civilized? You ought to see them invade our local Costco in Bellingham, WA, as they savage the isles and flood the gas pumps, filling up numerous 5 gallon cans, spilling gas and fouling our environment and tucking them into their trunks for the trip back to their “civilized world”. Despite this, we do however appreciate their contributions to our tax coffers, regardless of their uncivilized behavior. Beyond that, the US, not Canada, is the number one destination for foreigners wanting an opportunity at a better life.

      • nick kelly says:

        That’s why when we travel we put Stars and Stripes on our luggage, so people will think we’re polite, respectful of locals, etc.

        • nick kelly says:

          PS: any group travelling to shop will be impatient. We’ve all seen video of mall mayhem when a scarce sale item is mobbed. They happen in Canada but actual violence is rare. And no one reaches for their heat.

        • RightNYer says:

          Yeah, no one reaches for their heat because you’ve all voluntarily disarmed yourselves.

          Don’t expect us to do the same.

        • nick kelly says:

          We’ve agreed on something! Except it’s not voluntary re: hand guns, it’s the law, and we want it that way.

        • RightNYer says:

          It’s voluntary in that you voted for it, as opposed to your guns being taken by a dictator.

          I’m glad you want it that way. We want to keep our arms. Otherwise, we’re subjects, not free men.

        • NBay says:

          Yeah Right, I bet you are really quite the “warrior for freedom”. You make me feel SO MUCH safer (oh, and freer, too). Thanks for your continuing “services”.

          Been in combat? Defending the country and all that good stuff? It’s not quite like playing paintball or even going to the range.

          I was raised on the CA coast with guns. But open carrying in town, or worse, in stores, marked you as an FN idiot…..and it doesn’t add inches, no matter what it feels like to you.

        • RightNYer says:

          Who is talking about open carry? We’re talking about gun rights in general.

        • nick kelly says:

          The only useful guns in combat are long guns. We can own as many as we want. I’ve owned many. It’s hand guns that are used for most crime and ‘protection’ which leads to the majority of gun accidents and domestic incidents. In my hunting days I no doubt did more than most NRA types. I’ve never held a hand gun.

    • Jim says:

      Chinese buyers were not adding to housing demand lately as immigration was next to nothing du to covid. This is purely speculation play. Canadians with multiple properties are driving it.

  5. YuShan says:

    When history looks back at this a few years from now, people will be asking: “WTF where these central banks thinking when they deliberately inflated these bubbles that crashed the entire world economy?!?!”

    • Cobalt Programmer says:

      History blames the little people

      1. Immigrants, POC and poor
      2. This time greedy Rhood millennials and gen Z will be blamed for being irrational
      3. They will cherry pick the story of barmaid with five homes and say low class people are the reason
      4. Once again, the wisdom of the leaders and FEDs saved the day folks. They were never at fault.

      • Turtle says:

        Are you being facetious?

        We always blame Uncle Sam and rich people for things like this.

        • rhodium says:

          In 08 & 09 I had plenty of conservative family members who thought it was the little people taking out loans they couldn’t afford that crashed the world economy. I went through enough misery at the time that I was determined to learn the real story. I have no doubt if things crash again there will be an upswell of scapegoating by politically motivated entities in the media and elsewhere. Luckily this time around there seems to be a far wider and across the aisle recognition that the central banks are playing huge roles in creating these rotten unsustainable economic conditions. CB’s like the Fed are ultimately just bailing out the federal govt and a certain socioeconomic class from poor policy and hubris, and more people seem to know it.

  6. yxd0018 says:

    What if all CB want to inflate the price and have unlimited ammunition ? Why can’t they keep price artificially high? For another 20 years? The first chart doesn’t start from 2002 thus there might be other factors in play. Readers here seems believing returning to mean is inevitable but I suspect there are more reasons to explain the widespread global phenomena. When was the first time this blog started shouting Canada RE bubble years ago? Should we admit the reality and review the analysis loophole?

  7. greg says:

    Ok the housing increased 12% from when rates were 2% higher but if you are financing the bulk of the home price at the 2% lower interest rate your payments will be the same as when they were 2% higher. Instead of the 12% increase price of the home going to the lender via interest payments the $$ is going to the home owner via the higher sticker price. If you had cash last year and waited you will be absorbing the full 12% increase.
    So, actually not a bubble increase. One will have to wait to for any changes in pricing to declare whether there is a housing bubble.

  8. greg says:

    Average home price in Toronto in 1970 was 30K
    Average home price in Toronto 2021 is 1.2 million.
    A 40% increase in 50 years since America cancelled Bretton Woods and Canada and the WEST started printing Trillions of fake fiat currency.
    If home prices increase at the same pace the average home price in Toronto in 2070 will be 48million $$$ Big Ones.
    Seems impossible but folks would’ve said the same thing back in 1970.
    These bubbles have a long ways to go!!!!
    Canada and the West have signalled they will as Christine Lagard said, “do whatever it takes…forever!!!

  9. rob in london says:

    Lots of ridiculous over-bidding going on in my town right now. A couple of weeks ago a nondescript crapper went 40% over. That’s $160,000 in case you’re interested. More than I’ve ever paid for any house in my life.

    Mike’s nailed it. The total insensitivity to price absolutely screams money laundering.

    • yxd0018 says:

      I wouldn’t contribute FOMO to be the only reason for over-bidding. It’s an over-simplified explanation.

    • a guy from Toronto says:

      FOMO, people using secondary lenders to go up to 60% of TDS, Brampton loans aka Oklahoma swindle, taking HELOC to finance investment property, plus flippers, foreign speculators, money laundering…

      And I didn’t even mentioned immigration and foreign students, many of them using studies as backdoor to get into Canada, and panicking to get on the property ladder.

      The government is hell bent to push prices up, even 10% correction is apparently unacceptable, after 30% increase in Covid year.

      So, it is a pressure cooker out there, limited supply, unlimited demand both internally and externally, expectations of infinite growth underwritten by the government, all the good stuff.

      • yxd0018 says:

        All the reasons you listed are not new.
        Income hasnt explained the pricing many years ago. The Oklahoma swindle first appeared in thestar in 2001.
        The unhealth may last for a long time given how low property tax is. All these factors are noise when gov encourages you. The rest are losers in the game.

        • brent says:

          It’s been especially bad in Toronto over the past few years. I’ve lived in Toronto since 2002, and the days of decent income properties (except airbnb early comers) are long gone. Govt has encouraged high-leverage bets, and buyers have benefited from the gamble because the market has been artificially supported. There was no significant correction in prices in 2008-2010, so those in Toronto waiting for better deals have been shafted for a long time. This bubble has thrived on moral hazard and rewarded the gamblers. Despite recent rhetoric, it usually ends there without any significant structural reform. Canada depends on real estate and immigration because it has given up on building an innovative economy driven by new businesses and productivity. It’s sad because I used to feel optimistic about Canada, and moved here because I saw it as a positive example and fairer place than most.

  10. Kk391 says:

    ‘Demand vs Supply’ determines the price. There is no bubble in Canada. Irrational exuberant demand creates a bubble. There is no such thing. Its the very low supply compared to the demand has the caused of the price increase.

  11. yxd0018 says:

    “If I were that reader of Garth Turner’s blog who commented that he’s been “sitting on the sidelines for ten years,” I would be laying on the ground in the fetal position right now. Everybody around that guy has gotten shit-rich from simply buying real estate, and many of those people are far from rocket scientists. Consider a couple of dummies who bought a condo in 2016 for $400,000, sold it in 2019 for $650,000, and used that $250,000 tax-free capital gain as a down payment on a $1,100,000 house.
    Meanwhile, the “smart” people are on the sidelines. Waiting.
    They’re looking at stats, charts, graphs; reading The Economist, talking to their financial advisor from TD, listening to podcasts from experts, attending seminars, and doing everything in their power to avoid buying.
    This is a confirmation bias at play, if I’ve ever seen one.
    You want the market to crash, so you look for reasons why it could. Then you convince yourself that these facts are undeniable, and you use the resume of those who share your vision to support their opinions.”

  12. yxd0018 says:

    “I’m not a market cheerleader. I’m not in denial. I’m a realist. And I see what I have always seen in this market: a massive deficit between supply and demand.”

  13. yxd0018 says:

    All the millenials putting off pregnancies or living with a baby in a one-bed rental, trying to squeeze a few more years out of the downtown TO lifestyle, suddenly realized that the city would be shut down for a long, indeterminate period and decided to move their home buying plans (often in the suburbs) up in schedule. Boomer parents, seeing where the market was headed, and with interest rates at an all time low, pulled out equity to help. Savings grew quickly with no vacations, concerts, restaurants or bars to attend. Condo owners sitting on gains traded up for detached SFH, desperate for space. WFH meant people could spread out, pushing up prices in the surrounding areas. As the month-to-month gains threatened to price people out, more and more buyers emerged, fearing missing their last shot at home ownership. Then, the people who couldn’t get into a SFH, realizing condos were the only thing available at their price point, returned to that market. The vaccines arrived and skyscrapers seemed livable again. In short, a wave an entire generation of buyers got into the market at the same time as established owners were trading in equity, at a time when savings blossomed and debt was cheap. No mystery.

  14. yxd0018 says:

    It was written many years ago that due to the sheer size of the baby-boomer age cohort, the current home-buying-aged generation (the baby boomlet) would see the greatest transfer of wealth from their parents in modern history.

    The leading edge of the baby boomers (birth years 1946-1966) turns 75 this year. Many boomers (self-included), decided not to wait until death to leave an inheritance, but rather to bequeath some family wealth to the children while they were still young.

    This has resulted in many parents helping their children buy houses. This phenomenon has also contributed to increased demand in the real estate market.

    However, it should not be a surprise. It was foretold many years ago.

  15. Sailor says:

    Rural Maritime Canada, house prices are up 25% in a year (that’s an official Real Estate industry figure).
    Homes on the market are down 50%.
    The U-Haul franchises are stuffed with vehicles used for moves.
    Rental availability is under 1%, prices up 8% on average despite rent controls theoretically holding them to 1% (evict for renovations is the usual bypass of the rules).
    Fixer-uppers are severely hampered by the fact that contractors are booked up for over a year because of the newbuild boom (very largely single family to incomers, though it was mostly duplexes to locals before Covid). In practice, permit and building controls are being widely ignored, even in cities (one city officer estimated 2/3 of work being done in his city last summer was unpermitted).
    Goodness only knows where it goes from here.
    As an aside, all the immigrant “essential” fast food workers living 6+ to a house are the main source of Covid outbreaks, though the provincial governments are covering this up for the sake of big business contributions to party funds.

  16. I just don’t buy the argument that Real Estate is a safe place to put money instead of the Hindenburg Financial Markets. Any asset that has had an exponential price explosion over the last 5 years is at risk of reversing to trend. Home prices are historically tied to the increases in Personal Income, and watching the Government Stimmie Checks go the way of the Doo-Doo bird due to a fainting Dollar and worldwide loss of confidence in Fiscal Solvency here in Americana, I just don’t think this trend can continue very much longer.

    In fact, I think, in my very middle class neighborhood, I think the top is actually in because the lenders cannot get appraisals done that match the contract price and some lenders with half a brain are tightening standards to some degree because they know they are sitting on a pile of semi-trash loans. House next door selling for some $110,000 over 2020 tax appraisal by Frederick County VA which was approximately $355,000. And house across the street had just sold for $380,000 and not a lot of difference in the two, built within months of each other in 2002, and the crazy $465k house next-door has a pool that probably leaks and has a faulty pumping system. (Not to mention that the basement has been flooded no fewer than 5 times in the almost 19 years of its existence).

    I could sell my humble abode for about $365k to avoid lawsuits for undisclosed historical problems even if sold As Is, and my all in costs are now about $285k for the 2300 sq. ft. NOT THAT WELL BUILT HOME. Had about 5 different builders in here in 2002, some of which went bankrupt in 2009 to 2010.

    The market will have its vengeance on Sellers and Buyers alike, transacting in this Totally Insane Housing Market, because the Sellers may have someone like the Government coming after them if they did not disclose issues with the houses that affect Safety, Health, or Structural Integrity. The old saw regarding Caveat Emptor for a overpaying Buyer may not hold this time because any Government involvement in loan guarantees may cause legal action after the sale if material flaws that would have reduced the selling price are discovered by the sucker, ah …. buyer months after the sale.


    • yxd0018 says:

      2 reasons:
      – low-cost leverage
      – hedge inflation
      – compound return

      • YXD, an overpriced asset is just that: It’s potential for further way-over-trend appreciation (vs. Personal Income Growth!!!) is most likely negative now, you are going to lose money if you buy at these prices. Look at Wolf’s article on sales of existing homes last 3 months. THE TOP IS IN, so good luck in getting any of the Three Amigo’s you have listed as arguments for residential real estate NOW, except for below inflation interest rates TO LOSE YOUR BUTT.

    • Tony says:

      The price of a home is irrelevant to a Chinese in Canada. As well the price is irrelevant to a Punjab or Pakistani. This is the reason behind the tremendous rise in prices. The Chinese only buy into markets of any type when they skyrocket whether it be housing or anything else. I’ve seen new townhouses in Richmond Hill and Markham rise by half a million dollars a year over the past two years.

      • Jdog says:

        Chinese, with over a billion people, has a population problem, a big one. Chinese have been immigrating in mass throughout Asia for years to the point where many countries now have so much Chinese influence you think you are in China. It would not surprise me if in 50 years Canada had a Chinese majority…

    • jon says:

      I am seeing this a lot recently in my hood. A lot of homes into contract coming back to market.
      Usually, people who are in real estate think real estate won’t be adversely impacted and people who are not IN think a crash is impending.

      I am in all asset class but I am aware that these all are built on a house of card.
      The valuations are nose bleeding.
      I am sure FED won’t taper forget about raising interest rates.

  17. Tony says:

    You forgot Moncton, New Brunswick where home prices spiked by the highest in the entire country.

  18. Turtle says:

    “nearly tripled over the past 15 years”

    I’m guessing incomes in Toronto haven’t tripled in 15 years.

    I thought Toronto couldn’t possible go any higher five years ago and was wrong. I hope I’m not wrong this time because it’s pretty disgusting. A house is a place for a worker to live, so what’s a worker to do in times like this, in a place like Toronto? Are people piling into apartments or what?

    • a guy from Toronto says:

      they are building mostly 1-bdrm apartments these days, because they are appealing to investors. I didn’t check prices recently, but I think that these are selling for 500k+ with bidding wars probably more.

      Also zoning rules restrict high rises in most of GTA. It is a pressure cooker.

    • yxd0018 says:

      Income has stopped explaining the price across the world a decade ago. Salary in Toronto is much lower than that that in US east coast, nevertheless Calif.
      Look at tier 1 city in China and RE price and rental return rate there, you will forget the income factor.

      • brent says:

        yes. The underlying cause is a currency crisis because QE has brought more concerns about fiat and protection from deflation.

  19. Ishkabibble says:

    All the government of “Canada” has to do to control home prices downward is announce that instead of importing 350 to 400,000 (and increasing) human beings each and every year from now to eternity, “only” 50,000 will be imported from now to eternity. The day after that announcement, the prices of single-family residences in “Canada” will begin stabilizing and then, in a very few years, IMO, begin falling.

    Aging homeowners will hate dropping prices on their homes. Home buyers will love the dropping prices of potential homes.

    The house-building industry, along with a bunch of other industries, and their investors will hate the situation. Why invest in a shrinking economy?

    IMO, Japan’s rural housing prices are a pretty good predictor of what will happen to housing prices in “Canada” if “Canada’s” population begins to decrease as Japan’s has.

    Of course the above will never happen because there is not enough of a political constituency for it.

    • Petunia says:

      As far as I know, Japan has a high barrier to entry into the country and especially, the job market. This keeps real estate prices in check outside of the big cities.

      • Hiroshi Tanaka says:


        The check on real estate prices in Japan is very simple: depopulation.

        This is caused by two factors:

        1. Older people in the country kicking the bucket, and

        2. Younger people moving to the big cities.

        There is a very, very small number of people moving to what the Japanese term ‘inaka’ (country) and which by most other country’s standards actually be semi-rural. “Doinkana” (deep country) on the other hand is really country and rural like.

        There are very few restrictions on people buying real estate in Japan either by Japanese or foreigners.

        About the only restriction in place on buying land is buying farmland. To buy farmland in many areas in Japan you have to be a “registered farmer.”

        A “registered farmer” will also vary by area with some places being very lax in their definition and others very strict.

        Japan has some very cheap real estate and one can find numerous places for sale with a reasonable amount of and and a decent house within one hour of Tokyo by train for $US200,000 or even less.

        Condos near a decent beach can be bought for less than US$20,000…….

        Estimates are that over 17% of all real estate units in Japan are vacant

    • Artem says:

      Yes, Canada is attempting to be the new America by importing the poor huddled masses to populate their vast landscape (maybe Canadian real estate prices are trying to tell us that the land isn’t as vast as advertised). This is a win-win except that after it’s all said and done, Canada will likely develop all of America’s problems.

      You are completely correct that turning off the immigration and cheap money spigot will create a Japanese-style deflationary effect.

      • Petunia says:

        There’s lots of crown land in Canada. Not sure who really owns that, the Canadian govt or the British monarchy.

        • Sailor says:

          Nominally, The Queen owns it.
          In practice, since the Crown does not interfere with political decisions (except in highly limited circumstances), the Prime Minister of Canada can do what he likes with it. This has been the case since the Canada Act 1982, until when the British Parliament still had a theoretical say in it.
          Also in practice, keeping the Queen’s name on things effectively prevents a citizen taking the Government to court on those matters, and politicians of all stripes, both Federally and Provincially, are desperate to keep this ‘Get out of Jail free’ card. And if you can’t take the government to court, you’re a subject, not a citizen, whatever you or they call you.

  20. Bobber says:

    Looks like housing HYPERINFLATION to me, in Canada and the US, which has already spread to core commodities prices, and is starting its spread into consumer prices (Tim Horton’s, Home Depot, Walmart, etc.).

    The thought that any inflation is transitory is B.S. If you have 10% housing inflation in a year, it never reverses while central banks control the money supply. It’s a permanent increase in prices.

    In typical fashion, central banks are attempting to hide the truth via unclear language that is being misinterpreted by Average Joe. If central banks came out and said they wanted to increase housing prices by 15% next year, there would be a huge outcry. They’d rather do the deed and ask for forgiveness (or project blame) when things blow up.

    • Artem says:

      In order for inlation to take hold, dollar creation must outpace both global labor and commodity supply.

      That ain’t happening for now (but we are trying).

      • Jdog says:

        I am not sure what world you are living in, but inflation has already taken hold and is increasing dramatically.
        By most accounts, it was around 8% at the beginning of the year and has gone up from there substantially.
        It is quickly reaching the point of front running. Once front running begins, the Fed loses control, and inflation begins a feedback loop that causes it to compound based on assumed price increases.
        The last thing the Fed and the government will tolerate, is losing control, and for their loss of control to become obvious to the people.
        They will at some point in the not too distant future, have to put the brakes on inflation and that will mean higher interest rates. Possibly to levels not seen in a long time.

  21. David Hall says:

    Canada has the highest home price to rent ratio in the G-7.

    More retired Canadians used to come to America in the winter when the Canadian dollar was stronger. They are covered by national health insurance in Canada, but not out of country. The high cost of out of country supplemental health insurance is why some Canadians no longer visit America for the winter.

  22. Mora Aurora says:

    It is not just some big Canadian cities where house prices have gone exponential. The small BC interior cities in my area, the Kootenays, are also experiencing this phenomena.

    The solid two-bedroom house I was renting for $285/month back in 1992 and could have bought for $21,000 would now be easily overbid at $350,000 or rented out for +$1700. Rooms with shared facilities are nearly $1,000 per month, all year round.

    House hunting friends and locals, both rent refugees and investors/speculators are having to compete with work from home urban refugees from Vancouver, Alberta or even Toronto for the limited, available supply. Buildable land is scarce, as most communities are tucked within the folds and valleys of high mountain terrain. As such, the housing situation has become increasingly tense, a combination of FOMO and bidding wars is driving prices up and people out to fringe areas and existences.

    Foreign owners may appear just for ski season (or a few weeks) and rent out the rest of the year but resident homeowners in my small city are mostly nationals, with a few Americans and Europeans. British Columbia is (was) the local dream residence for most Canadians, as the Lower Mainland, Vancouver Island and the southern interior experience much milder winters and are relatively free of the biting black flies and mosquitos that most of the country endures during the summer.

  23. Hernando says:

    It’s more than speculation. People see the government overreach all around them and watch inflation skinning their wealth like a rabbit. Many now believe this will continue into the future with every “crisis”.

    What happens next fall if the virus resurges? What happens if there is a financial crisis? People will be given money, people will be given special loans and modifications, interest rates will remain low.

    I imagine some folks are getting out while they can. Money stripped away is labor stripped away and that is akin to serfdom.

    • yxd0018 says:

      What’s wrong with free-loading? At least that increases your odd. There are not many such opportunities in life.

    • Nathan Dumbrowski says:

      For sure. Now that the government has tapped this untouchable tenets it will go back to the well and too often. We will see forbearances in the future used to fix everything from virus, to local emergencies to foreign events etc… Then the stimulus checks will come when it helps to win an election or for any event that may impact a region like an earthquake or weather event…

      We are no longer in un-charted territory. It is now familiar

  24. Xavier Caveat says:

    Oh, Canada
    Your home & native land
    A housing bubble out of hand
    With glowing hearts we see thee rise
    The true worth of a SFH in Regina
    From far and wide
    Owe Canada, we stand on guard for good deals

  25. Bob Moriarity just did a piece on four mining companies in Saskatchewan. He says that is the best run province in CA. Where you own gold mining shares is important.

  26. Jdog says:

    Bottom line, is whether it is Canada, or the US, if you cannot afford to buy a home and pay it off in 10 years, you are basically poor. Unfortunately, that describes most of the working class of both countries.
    Come on people, it is a roof over your head, that’s it. If your labor and skills will not pay for a roof over your head, then your standard of living is in the toilet, and your new cell phone, and flat screen TV will not change that.

    • Xavier Caveat says:

      What, no Chesterfield?

    • Petunia says:

      It’s not just the US and Canada, it’s the entire English speaking world, the five eyes nations, US, UK, Canada, Australia, and New Zealand. This was pointed out by the Utuber from Canada. Same housing market, same surveillance push, same agendas.

      • yxd0018 says:

        You under-estimated the non-english-speaking nations: china, Taiwan, Malaysia, etc.
        If you don’t follow up, you get poorer.

  27. Dudu says:

    quite simple, blame the bubble burst on Covid. By doing this way is hard to protest against somebody (organization) since Covid is a virus.

    Imagine if the blame got on Fed and Governments you will have a revolution.

  28. Minutes says:

    Our Canadian brothers and sisters need not be upset by the bubble talk. The numbers are the numbers. This isn’t a question of whether we like Canadian Geese, we don’t, or Canadian Bacon, we do. The bubble in Canada is among the worst in the world. We are trying now to catch up. I hope we don’t.

    • WES says:

      The only good Canada goose is a dead one! Sadly no one hunts geese anymore, only ducks! Shotgun blasts go off all day long during hunting season and the dam geese pay no attention to the noise! Only the ducks hide! I say Canada is going to the birds!

      • NBay says:

        Actually, a lot of Canada geese discovered 30+ yrs ago many migration stops where they were not only not shot at, but fed. We have several local places (small public lakes, ponds) where they have been for many generations, I even saw one in OK, with pay for feed dispensers. I ate (hunted) duck once and it was too stringy, gamey/greasy for me. The almost inlaw who hunted them (Medford OR) confessed to me it was just a reason to get away from the old lady and spend time with “the boys”. He also dug me up a Kaw 400 and we went “dirt” biking with his friends. Those guys love riding in total slop and thru close trees….forget that and the ducks.

  29. Nicko2 says:

    Another quirk….the CAD$ has strengthened against the USD around 15% over the past year. If energy prices go up again, expect the CAD$ to get even stronger.
    Immigration will ramp up again as the pandemic is ending.

    The boom will continue; there will be no crash.

    • RightNYer says:

      I’m really tired of people saying definitively that “there will be no crash.”

      How exactly do you know?

      It’s as stupid as predicting with certainty that there will be no earthquake on the West Coast.

  30. Optimist_Tim says:

    Home prices may be driven up by some money laundering, but the wider issue is speculation. When oil went over $100 in 2008, a real estate agent told me that a local dentist and his wife owned 120 homes.

    It’s the same here in Canada as Wolf mentioned happening in the U.S., where people upgrade to a better home but keep their old one and rent it out near cash flow breakeven, with the hope of capital gains and future positive cash flows when the debt is paid off.

    In Alberta’s 6 year oil bust, the capital gains haven’t materialized so people are getting out of their rentals to some extent. My dentist’s friend sold 5 townhouses that used to rent for $1800/mo but had 4 empty and no bids at $1200/mo.

    I go to Walmart and the cashier who owns a home asks me if I know anyone who wants to rent?

    I would like to think that limiting home ownership to 1 or 2 per person with no corporate ownership might control the speculation, but maybe they would just work around the new rules and continue.

    The government has helped a bit by lowering amortizations or at least those eligible for mortgage insurance, but the another issue is leverage. To buy a blue chip stock I have to put at least 33% down, but homes are 5%. Add low interest rates and you get the current situation of impossible affordability starting from square one.

    There was a quote in Market Wizards where one trader said, “The futures market is a crazy place where people buy commodities on 1% margin, and most of them borrow that.”


  31. Mira says:

    Making Money in Todays World .. what is holding us back ??
    With the wonderful capacity to look young again despite our old years .. persons are pretending to be & even half their age.
    This is great at a party or for wedding pic’s.
    But what about medical professionals in a hospital ??

    Should certain persons be made to compulsorily wear AGE TAGS.
    In todays world we have many choices ..
    Highly skilled & up-to-date with modern knowledge & techniques.
    Equipped with yesterdays .. tried & true .. knowledge & low tech skills.

    Hospitals are constantly being upgraded with ground breaking software & equipment & new safer & less invasive treatments .. young medical graduates are most certainly trained to use & adapt readily to all this ‘new stuff’ .. it is the new stuff we want to access when we seek medical attention isn’t it ??

  32. LifeRunningForward says:

    Boots on the ground – I have watched over the last year as micro markets have risen in value by 25 – 40% within 8-10 months. These same markets were already considered overvalued. These properties, within a 1-4 month period, are often earning as much as or more than what it’s owners make in a year.

    Wages in the last 10+ years have stagnated despite the rise in inflation and RE prices. This has priced many out of the housing market (rental vacancy rates are typically 0.6% so rental is often not a solution) long ago creating a housing crisis for both for the bottom and the middle. Prior to this last spike, many households were reporting spending 50-60% of their monthly earnings just to keep a roof over their heads. This included upper middle class households.

    Household budgets are experiencing high inflation. Not helpful given the already historically high over leveraged household and student loan debt. (Education from K-12 is paid via taxes and while the post secondary sector receives government support, most of our students leave post secondary with significant debt).

    As a cherry on the top, MNP completed survey’s that indicated an increasing portion of households were within $200 per month of not being able to make their bills. I believe the last number I saw was 56% of households could not sustain a cost increase of $200 per month. Given all the above, this does not bode well for the CDN households nor will it allow what has happened in the RE market to be sustainable.

    Quite frankly, talk about CDN banks being conservative and the stress tests all you want but it wouldn’t save anyone. The standards are still too loose and if they weren’t we wouldn’t see the income to debt ratio or the $200 a month max left in the household budget. The mortgage brokers also believe there will be a landslide of defaults if interest rates rise. With only $200 a month left to make the bills Hmmm…food?, gas? mortgage? Which don’t you pay when all costs are rising?

    There are a lot of variables that have contributed to this, including but not limited to, money laundering, greed, financial inequity, FOMO, speculation and bottomed out interest rates. It’s not 1 thing but all of them and regardless of what % each contributed to this situation, all but the extremely rich are running out of room. Something will have to give so no this can not continue. The question is what will sink the ship? Will it be the inflation that eats up that $200 a month, a stock market bust, an inability for the economy to roar back or rising interest rates causing an inability to service the debt? Either way, there is no way this is sustainable, never mind prices continuing to rise long term. Even Canadians will eventually revolt.

    • Nathan Dumbrowski says:

      Credit. That is why the banks are offering easier credit lines for business and consumers. Business benefits people spending whether its cash or credit. Maximum profits is the name of the game. So if people are close to going broke with +/-$200 they can always reach for that credit card or three in their wallet. Debt trap engaged

      On paper you can make that $300k mortgage payment on Walmart salary we just have to get creative

  33. Rosebud says:

    The baby boom baby boom, 1989-1993, midpoint 1991.

    29.5 – 30 years ago. At that age … Its the Get married, Get house, Have kids point.

    Bonus daily double. What was the exact event that peaked this period? Do you remember where you were? what junk food and ingredient list? What was on TV?

  34. sam b says:

    I’m always interested in the Canadian RE market, because it so closely mirrors the behaviour of New Zealand, where I am. We’ve had a similar insane run-up in prices recently, from a similar high starting point. We have a very comparable immigration situation too – big numbers coming in from China and India in recent years, stalled in the last year by Covid.

    I would argue in favour of our housing bubble being the *most* ridiculous though. The quality of housing is now utterly irrelevant; a derelict house riddled with black mould, beside a busy road, in a neighbourhood where cop cars are screaming past every few minutes, will still not sell for less than $1m (US) in any part of Auckland or Wellington. And our wages are substantially lower than in Canada or the US. Nonetheless, having been spared any substantial correction in property prices in ’08, there is not a single generation who have seen anything except property going up. Normal rental yields are now sub-4% BEFORE costs. It doesn’t seem sustainable… yet somehow it sustains.

  35. BobbieB says:

    We live in Philly, My in-laws have had a cabin for 50 years on a lake 60 miles north of the U.S. border. It’s extremely beautiful 3 months a year. My problem: it’s only beautiful 3 months a year. The other nine months, well… not so much.

    BTW, the “news” we get from the only radio station we can receive consists of 75% stories about the United States .

  36. Cashboy says:

    I don’t see there being any problem regarding a housing bubble anywhere in the west because once they introduce UBI, people will be able to make the mortgage payments and rent payments with no problem.
    The Central Banks might even be able to increase interest rates if they pay out enough UBI.

  37. Ross says:

    Paulo is Canada’s Petunia.

    Ross, from the other coast.


  38. Bombastic Failure says:

    A prevailing belief in Canada is that speculation/money laundering by non-residents is the primary culprit behind the “housing bubble” in the main cities, but I think that local economic & social factors are stronger drivers of residential prices: money supply, average income, interest rate, demography, property taxes, government/banking system policy regarding mortgages, rent control regulations, building costs, etc. By the way, Immigrant Investor Program that allowed passive investments like real estate in exchange for residency was closed in 2014.

    One may even question if there’s a housing bubble in real terms, since each investor uses his own benchmark/discount rate: historical rate of price growth, CPI inflation, M2 monetary inflation, stock indexes, etc. Recently, investment guru Andrew McCreath presented a chart showing the strong correlation between housing prices and M2 in South Korea. In Canada, M2 money supply (physical & electronic cash) quadrupled from $ 541 Billion in feb 2002 to $ 2177 Billion in feb 2021, exceeding the rise of Teranet House Price Index in Toronto over the same period. In other words, Bank of Canada printed money so fast that house prices in Toronto went down in real terms (we ignore rental income & landlord expenses, suppose they cancel one another).

    It’s still possible to buy a condo/house/duplex in Canada with 5% down payment, or a 3plex/4plex with 10% down payment by using mortgage insurance. The purchase price must be under $ 1 million and buyer’s debt service shouldn’t exceed prescribed limits. Even if insured mortgages are fewer now, extreme leverage helped the market rise in Montreal and Eastern Canada.

    The level of annual property taxes is another factor. In Montreal it is near 1% of city assessment, in Halifax and Winnipeg 1.2%, and in Ottawa 1.1%. The lowest taxes are in Calgary (0.75%), Toronto (0.6%) and Vancouver (0.29%). Compare that with the average rate of 2% in Illinois (even 3% – 3.5% in some neighborhoods) to understand why Chicago is one of the most affordable metro areas in North America.

    Kyle Dahms, economist at the National Bank, said recently that the ratio of housing costs to gross income is 21% in Quebec City, 22% in Edmonton, 23% in Calgary, 32% in Montreal, 56% in Toronto, and 64% in Vancouver. Since 41% is the affordability benchmark, Toronto and Vancouver are largely unaffordable, but the rest of Canada fares much better.

    An interest rate reduction from 3% to 2% supports a price increase of 11.9% by keeping the mortgage payment unchanged. Such a cut occured from may 2019 to may 2020. Combined with the 3% income growth over the same period, it leads to a price increase of 15% based only on fundamentals. Furthermore, the dramatic cut of interest rates after 20 years of continuous price gains boosted refinancing/HELOC, and without other outlets the money flooded the residential market, pouring gas on the fire. Saving rate surged in 2020, helping acquire the down payment, and the boredom of extended stay-at-home brought many beginners on the housing websites.

    Those lacking funds or too picky waited for the right time to come or the right property to show up… until Fall 2020 when prices exploded as it became clear that, despite official forecasts, the bubble grew even larger. After losing several biding wars, many buyers in Montreal got FOMO and started to offer more and more over asking prices until they “won”. Late “winners” were rather suckers, since they could have easily bought a similar property at 60% – 70% of that price in 2019. Two years ago, I was almost begging people to make offers for a luxury, detached duplex not far from downtown that payed itself even with 5% down payment. All potential buyers quit because an offer was received and they didn’t want any competition. One year later, I saw biding wars with 24 offers and no complaint :) After two price cuts and a small refresh, the Chinese resident who made the initial offer closed the deal at 685k. In 2020, it could be sold for 900k. No brilliant investors, only people with common sense who understood value and acted accordingly.

  39. Sound of the Suburbs says:

    Real estate – the wealth is there and then it’s gone.
    1990s – UK, US (S&L), Canada (Toronto), Scandinavia, Japan, Philippines, Thailand
    2000s – Iceland, Dubai, US (2008), Vietnam
    2010s – Ireland, Spain, Greece, India
    Get ready to put Australia, Canada, Norway, Sweden and Hong Kong on the list.
    It wasn’t real wealth, just a ponzi scheme of inflated asset prices.

    Will they ever learn?
    It doesn’t look like it, does it?

  40. Augusto says:

    Canada has rock bottom interest rates, like the US, so housing market is on fire. The real economy is on its knees, supported by government handouts and money printing. Our deficits are out of control, and the entire public sector, with the exception of our medical staff, has taken a years holidays (no one can get service). Commodities are helping somewhat, but the government is doing everything it can to eliminate commodity industries, that is oil and gas, mining, and even starting to get its paws into agriculture. In short, we have our problems, we are just a lesser dirty shirt in the hamper.

  41. Jdog says:

    Another effect that many people are ignoring is that the skyrocketing home values are going to be reflected in their property taxes. We just got notification from our county assessor that the average increase in assessments this year is 25%. Also as others have mentioned, the cost of lumber and building materials going up by as much as 400% is giving insurance companies the perfect excuse to rise premiums substantially.
    It is conceivable, that even for people not buying or selling, their costs of maintaining their home may be going up thousands a year….

  42. yxd0018 says:

    Ask 400k CAD , sold for 770K for 1-bdrm cottage. It happens everywhere in Canada.

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