Magnificent Housing Bubble Unravels in Much of Canada
Canada’s housing bubble, which has been so much more magnificent than anything the US was ever able to conjure up, notched another gain in March, according to the Teranet-National Bank House Price Index, which rose 0.3% for the month. Prices were up in eight of the metropolitan markets and down in three, the broadest diffusion in seven months. Year over year, the index rose 4.7% to a new all-time record.
Since 2000, home prices have jumped 140% in the survey’s 11 metropolitan markets. A number of years charted double-digit gains before the Financial Crisis and right afterwards. Before the Financial Crisis, Canada’s home prices had largely followed the US run-up. But when US housing went into a terrific tailspin, Canada’s home prices just dipped about 8% before re-soaring, fired up by easy money, a resource boom that has now crashed, and in certain metropolitan markets an influx of flush and motivated foreign buyers.
Home prices are now 26% higher than they were at the already crazy peak in 2008. The chart of the Teranet–National Bank National Composite House Price Index is what areal housing bubble looks like. Note the now puny dip during the Financial Crisis:
But it wasn’t spread evenly. In some metro areas, home prices are still skyrocketing. In others, they’ve never moved much beyond the prior bubble. And in other areas again, once booming, home prices have already started to deflate.
…click on the above link to read the rest of the article…
