http://www.theglobeandmail.com/report-on-business/top-business-stories/bc-ontario-2-frothy-housing-markets-3-stats/article29070884/I wonder how much of it is because of speculating and builders building inventory financed by credit. Credit continues to grow faster than GDP even though private debt is now = 100% of GDP for the first time.
Quote from: wisdom on March 09, 2016, 07:19:29 AMhttp://www.theglobeandmail.com/report-on-business/top-business-stories/bc-ontario-2-frothy-housing-markets-3-stats/article29070884/I wonder how much of it is because of speculating and builders building inventory financed by credit. Credit continues to grow faster than GDP even though private debt is now = 100% of GDP for the first time.I wonder about that too. It just seems like the housing market is too big for foreign capital to have such a big impact. Too bad there's no data on this.I was looking at this BBC article on Australian housing: "Last year Chinese buyers spent a record A$12bn on Australian property, boosting house prices at a time when locals were already feeling anxious about the rocketing cost of property." http://www.bbc.com/news/world-australia-35601102Not sure if that's accurate, but if it is, then it's tiny compared to Australia's outstanding housing-related debt of $1.5 trillion. The growth in housing credit (7.6%) last year or $108 billion is significantly higher than the $12 billion of Chinese buyers.http://www.rba.gov.au/statistics/tables/xls/d02hist.xls?v=2016-03-09-11-13-12
As we have said a few times before, the collapsing commodity prices will not spare Canada. Canadian housing prices, particularly in Toronto and Vancouver, have gone up significantly, driven by lax policies at CMHC (Canada’s equivalent to Fannie Mae and Freddie Mac). Canadians have accessed their increasing real estate wealth through lines of credit easily available from the banks. Sounds familiar? This is exactly what happened in the United States before the financial crisis in 2008/2009. If history is any guide, this will reverse and we continue to be shocked at the massive debt levels incurred by young people (below 45 years old), with no financial buffer against hard times as the C.D. Howe report, Mortgaged to the Hilt, shows.
I bet US house prices aren't rising by $100k each month unlike Vancouver either. In some cases, this is happening in a day. I love it when people say this is expected.
Thought this was interesting. According to the Canadian Real Estate Association (not exactly a transparent organization, but still), the average house in Canada was $470k as of January 2016.http://www.crea.ca/housing-market-stats/national-average-price-map/Van and Toronto are really driving it, though:http://www.cbc.ca/news/business/housing-crea-january-1.3449838According to Statscan, the median household income in 2013 was $76k (or about $38k per person if you assume two earners).Median house price in the US seems to be around $185-215k depending on the source.
Prem Watsa in the recent Fairfax letter:QuoteAs we have said a few times before, the collapsing commodity prices will not spare Canada. Canadian housing prices, particularly in Toronto and Vancouver, have gone up significantly, driven by lax policies at CMHC (Canada’s equivalent to Fannie Mae and Freddie Mac). Canadians have accessed their increasing real estate wealth through lines of credit easily available from the banks. Sounds familiar? This is exactly what happened in the United States before the financial crisis in 2008/2009. If history is any guide, this will reverse and we continue to be shocked at the massive debt levels incurred by young people (below 45 years old), with no financial buffer against hard times as the C.D. Howe report, Mortgaged to the Hilt, shows.