Canada’s Real Estate Bubble Has Grown Over 800% Faster Than US Home Prices

Canadian real estate prices are some of the fastest growing in the world, and have been for some time. The US Federal Reserve (the Fed) updated its real home price index for Q3 2021. All G7 countries are seeing home price growth, but nowhere is quite like Canada. In Canada, real estate prices have grown almost double the rate of the US over the past year. Since 2005, home prices have grown over 900% faster than American prices. Nothing else in the G7 even comes close to Canada. It must be some sort of remote, tax-free island with no land.

Canadian Real Estate Prices Have Grown Over 21%

Canadian real estate prices have shown an obscene amount of growth over the past year. Real home prices rose 0.8% in Q3 2021 and are now 21.4% higher than the same quarter a year before. This is just under CREA’s estimate, but a little higher than the Teranet estimate. In any case, the growth dwarfs that of other G7 advanced economies. 

Canadian Real Estate Prices Grew Nearly 2x The Next G7 Country

Other advanced economies are seeing crisis-inducing price growth, but nothing like Canada’s growth. The 21.4% annual growth seen in Canada is nearly double the 11.6% observed in the US over the same period. Germany is dealing with an affordability crisis so extreme, they’re discussing nationalizing landlords. How much did prices need to rise in the past year to trigger that kind of radical take? Germany’s annual home price growth is up a whopping, uh, 6.3% — under a third of Canada’s gains. 

G7 Real Annual Home Price Growth

The inflation-adjusted annual price increase for home prices in G7 countries in Q3 2021.

Source: US Federal Reserve; Better Dwelling.

Canadian Home Prices Have Grown 800% Faster Than The US

Few in Canada think its real estate prices are a significant cause for concern. That appears to result from the numbing of seeing it happen for an extreme amount of time. As of Q3 2021, Canadian home prices have increased 140% since 2005. This is 819% faster than the 15.3% real growth the US has seen. The next closest country to Canada in the G7 is Germany at 49.3%, nearly one-third of the increase. This kind of growth is best appreciated as a graph.

G7 Real Home Price Index

The inflation-adjusted indexed price of homes across the G7 (2005 = 100).

Source: US Federal Reserve; Better Dwelling.

Canadian real estate prices are showing some of the most exuberant price growth in the world. It’s done this for some time, and hasn’t managed to trigger any warnings. Well, it has, technically. Several of them, for over a decade. Still, Canada doubled down on its easy credit strategy. It’s even trimming its GDP forecast to facilitate low rates and higher home prices.

16 Comments

COMMENT POLICY:

We encourage you to have a civil discussion. Note that reads "civil," which means don't act like jerks to each other. Still unclear? No name-calling, racism, or hate speech. Seriously, you're adults – act like it.

Any comments that violates these simple rules, will be removed promptly – along with your full comment history. Oh yeah, you'll also lose further commenting privileges. So if your comments disappear, it's not because the illuminati is screening you because they hate the truth, it's because you violated our simple rules.

  • Frank Daugherty 10 months ago

    It needs more emphasis that this is 800% PLUS INFLATION.

    • Whiskey Foxtrot 9 months ago

      Home prices traditionally only just outperforming inflation until the government was stacked by the real estate industry and it became the only thing Canada knows.

  • Simon Chan 10 months ago

    Didn’t Bank of Canada try to do the same model in-house, and saw no problem? LOL.

    This is why kids aren’t allowed to grade their own homework.

  • 🤐 10 months ago

    No comments.

  • slava 10 months ago

    We are finish…. good work….

  • Dax 9 months ago

    All that sweet, sweet money laundering.

  • Houseprice 9 months ago

    It is unfortunate that govt and BOC are sitting quiet on this. House prices are making rentals go up as well. There is very less desire to cool this off.

  • Jared 9 months ago

    I think this would be looked at by the Canadian government / BofC as successful policy

  • Peyman 9 months ago

    Real estate prices are so high, all Canadians are millionaires. No wonder no one wants to work. Something has got to give!

    • Saul 9 months ago

      Not sure about you but I still want to work. Better get off your ass!

  • Veera 9 months ago

    Also Canada attracts and easy immigration for High skilled legal immigrants who are mainly in their 30-40’s wanted to buy home, settle there and grow family..this is also one reason behind someone hwo is willing to pay premium and buy homes!! Hope the momentum stays or flat!

  • USA 9 months ago

    We are expecting 4-6 mortgage rate hikes this year.
    Lumber prices crash 30% in 2 weeks as rising mortgage rates take some heat out of US housing market.

  • Mark Bayly 9 months ago

    There is no connection with income which have not kept pace with inflation. If all these people go bankrupt with these massive mortgages nobody will care

    • Jeff 9 months ago

      Unfortunately the CMHC (aka The Taxpayer) will care – they insure the worst of them with taxpayer money. It’s a really perverse system – the government prints money at the top which inflates prices, especially the crappy mortgages the CMHC insures. At present if someone is in trouble, but the house has gone up, they just sell, but if prices go down and folks can’t sell and need to foreclose? Well now the CMHC is on the hook. The BOC knows this, the Feds know this… it’s in everyone’s interest to keep this rouse going as long as they can, because they know when this starts falling apart, which it will, it will be a disaster for the Federal government.

  • Diane 9 months ago

    2 countries that are interlinked, one has a strong economy and is rational about inflation. Another has a poor economy and is irrational about inflation. When the US increases rates, Canada will have to follow, only our economy and employment has not recovered… how is that going to work?

Comments are closed.