{"id":12346,"date":"2015-09-17T06:11:38","date_gmt":"2015-09-17T11:11:38","guid":{"rendered":"http:\/\/olduvai.ca\/?p=12346"},"modified":"2015-09-17T06:11:38","modified_gmt":"2015-09-17T11:11:38","slug":"time-bomb-under-canadas-housing-bubble-makes-a-loud-tick","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=12346","title":{"rendered":"Time Bomb under Canada\u2019s Housing Bubble Makes a Loud Tick"},"content":{"rendered":"

Time Bomb under Canada\u2019s Housing Bubble Makes a Loud Tick<\/a><\/h3>\n

The Bank of Canada has been fretting about the ballooning debt of Canadian households. Last year, it repeatedly called it a risk to \u201cfinancial stability,\u201d perhaps in preparation for raising its benchmark interest rate. Then Canada\u2019s economy tanked.<\/p>\n

In July, when\u00a0the freaked-out Bank of Canada<\/u><\/a>\u00a0cut its benchmark rate\u00a0for the second time this year<\/em>, it admitted that the rate cut comes at the price of \u201cfinancial stability risks\u201d which \u201cremain elevated.\u201d Governor Stephen Poloz added: \u201cOf particular note are the vulnerabilities associated with household debt and rising housing prices.\u201d<\/p>\n

These rate cuts didn\u2019t do much to support Canada\u2019s resource economy that has been spiraling down in the wake of the commodities rout. But they made up for it by inflating the housing bubble even further.<\/p>\n

The Teranet\u2013National Bank house price index, released September 14, hit new records every month this year. In August, it\u00a0was up 5.4% year-over-year.\u00a0Note how the index has soared since the peak of the prior housing bubble that ended with the Financial Crisis:<\/p>\n

\"Canada-house-price-index-2015-08\"<\/a><\/p>\n

The index masks what Marc Pinsonneault, senior economist at NBF\u2019s\u00a0Economics and Strategy,<\/u><\/a>\u00a0calls the \u201cdichotomy\u201d of Canada\u2019s housing market. In some cities, price increases are cooling, year over year: Victoria +3.2%, Edmonton +0.8%, Calgary +0.7%. In other cities, prices are actually falling year-over-year: Winnipeg -0.4%, Ottawa-Gatineau -0.4%, Montreal -0,5%, Quebec City -0.7%, and Halifax -1.4%.<\/p>\n

But they\u2019re sizzling in Vancouver +9.7%, Hamilton +8.8%, and Toronto +8.7%. And prices for\u00a0non-condo<\/em>\u00a0homes in Vancouver and Toronto \u2013 the two cities account for 54.1% of the index \u2013\u00a0jumped over 10%!<\/span><\/p>\n

On cue, total\u00a0consumer debt<\/u><\/a>\u00a0rose 4.9% year-over-year in July to C$1.86 trillion. A trend that has been picking up speed recently: on a monthly basis, consumer debt jumped in July at an annualized rate of 5.4%. Mortgage debt \u2013\u00a0over two-thirds of total consumer debt \u2013\u00a0soared at an annualized rate of 6.9%.<\/span><\/p>\n

 <\/p>\n

…click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

Time Bomb under Canada\u2019s Housing Bubble Makes a Loud Tick The Bank of Canada has been fretting about the ballooning debt of Canadian households. Last year, it repeatedly called it a risk to \u201cfinancial stability,\u201d perhaps in preparation for raising its benchmark interest rate. Then Canada\u2019s economy tanked. In July, when\u00a0the freaked-out Bank of Canada\u00a0cut […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[942,103,1956,406,2340,943,4254,4255],"class_list":["post-12346","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bank-of-canada","tag-canada","tag-canadian-housing-market","tag-housing-bubble","tag-housing-market","tag-stephen-poloz","tag-wolf-richter","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12346","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=12346"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12346\/revisions"}],"predecessor-version":[{"id":12347,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12346\/revisions\/12347"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=12346"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=12346"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=12346"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}