The Truly Never-Ending Forever Canadian Housing Market

[GRG55]

Blow off stage? Finally?
Or just business as usual, where "Vancouver Going Up" is joined by Toronto Going Up, and Ottawa Going Up and Montreal Going Up, and Lunenburg Going Up, and Kelowna Going Up, and pretty well EVERYWHERE Going Up?
Spring is just arriving in most parts of Canada. The traditional time of year when the housing market REALLY takes off. Can't wait to see what sort of frenzy that sets off...

[lakedaemonian]

Tripled in 12 years. Madness.

Wages up 25% in comparison(guess)?

Somebody at the Crown Bank surely must have modelled Dante’s Nine Circles of Hell for Canadian Real Estate interest rates.

I bet the interest rate differential between each circle of hell is pretty thin.

50 basis points would be too much between each, bringing the proverbial 4 horsemen before all nine interest rate rise circles of hell.

Would 25 be too little?

What would 2.25% increase in mortgage rates do?

[Mega]

"They" got to keep the ponzi scam going.............house prices are the gift that keeps on giving
They locked into a deflation loop, so they can print & spend at will.............will it ever end?
Yes, but it took 70 years for the fall of the USSR

[santafe2]

Hi GRG. What is happening in Canada is what began in the US in 1980. We bought our first home in Pasadena CA in 1980. A starter, 900 sq. ft. for ~$67k. We remodeled it making several classic mistakes but it turned into our first rental when we bought our first respectable home. I had the GI Bill so we only had to put down $4K to close on a $110k, 80 year old fixer. Seven years later we sold them both for more than 3X. Pasadena goin’ up. That was 1989 when the value of Tokyo real estate was being measured in square feet. Canada is unfortunately for most Canadians, just beginning.

I used to think I was smart because we weren’t the usual idiots that used our homes like an ATM. But really, we’ve been lucky to grow up while markets are expanding and many folks in Asia, Eastern Europe, etc. want to move to North America. Since COVID has made remote work almost respectable, small towns have more converts so this will continue to spread.

On a more personal note:

You might remember that we bought a boat and have been living aboard since last summer. It was a good place to stay distant until we were vaccinated. We’re back in Santa Fe now for a few months, building out a few new rentals and generally organizing our lives so we can go to the Bahamas this winter and we hope, Montreal in 2022.

I want to thank you for pounding the oil turn around message in 2019. Yours was one of the last posts I read here before just couldn’t read or post any longer. When in 2020 oil tankers were sitting on the ocean with no takers even my feeble brain had a light bulb on moment and I remembered your post begging us to not ignore how cheap traditional oil had become. Yeah, it took a paying for oil moment to make me invest. My family will never understand how I got so smart regarding traditional energy but thanks for all of your excellent posts.

[GRG55]

March data is in and charted below. For the first time in living memory ALL 6 Canadian cities on this long running chart set a new all-time record high average single family detached nominal sales price record in the same month.

I've come to the conclusion I have been completely wrong viewing this as speculation. It's not even cult behaviour any more. Property is the newest national secular religion in Canada (starting in Vancouver in 2010 - "Vancouver Going Up" was correct).

[thriftyandboringinohio]

Thanks GRG55. Your continuing long term reports about Canadian housing prices are highly valuable and very interesting.
Thanks for making this considerable effort.

While we have your attention, how's the petroleum business these days?

[GRG55]

Difficult to see this is foreign buyers and Chinese dudes. Once again Canadians doing it to themselves...

CANUSA Housing.png

[GRG55]

April data just charted. Are the slight downticks signifying the permanent end after the latest blow-off phase? Or just another head fake before the next blast off "To the moon, Alice, to the moon!". But I do wonder what these housing price charts would look like charted in Bitcoin instead of Loonies. :-)

[thriftyandboringinohio]

Apparently whatever our friends in Canada have discovered is being enjoyed in the US now, at least to some degree.

bfmF63C_0.jpg?itok=1gQOCEMk.jpg

[jk]

important to remember that the u.s. move lately has a very different dynamic than '07. the earlier period was people getting mortgages they really couldn't carry, waitresses owning and flipping multiple houses and so on, and the paper being sliced and diced to give garbage AAA ratings. the current move is based on low mortgage rates, young families relocating from city centers to single family, and very low inventory. prices are high and total actual sales are low because of the inventory problem. someone has to figure out how to repurpose empty office and retail space into residential properties.

[santafe2]

This summer we've sold about 75% of local real estate assets acquired in 2012-13, (well reported here). As interest rates remain low to support Fed debt and Millennials forming households on top of COVID driven shortages, available housing is in short supply in the US. Real estate FOMO is king. The US is not Canada, this is a bubble.



jk replies:
i just read that 70% of new mortgage originations are to people with fico's 760 and up.  i think housing is more in a short squeeze.  zoning regs, pandemic-limited building, building supplies shortages 2o to supply chain disruption and a sudden desire for people to flee cities and relocate to less dense housing, further enabled by remote work, and - yes- FOMO, all have resulted in a supply/demand imbalance.  there are certainly people doing value-add house flipping, but afaik that's not nearly the bulk of sales.  another factor is large investment entities buying quantities of single-family houses to hold for rental, further limiting supply for individual buyers. lately buyers have been pulling back because of the high prices, so this over-heated market is slowing, but i don't think we're looking at a housing crash, the way we were in '07.

i do think you picked an opportune time to sell.

[santafe2]

Agree. The housing market will not crash unless the US economy crashes. I don't see that happening any time soon.