Canada

Canadian Real Estate Prices Grew Over 29x The Rate of US Home Prices

Canadians know real estate prices have grown very quickly, but most likely have no idea how fast. US Federal Reserve data shows when US home prices took a dive during the Great Recession, Canadian prices didn’t. Instead, Canada has flooded the market with a number of policies designed to increase the amount of debt households can carry. Consequently, Canadian home prices have seen prices grow not twice, or even ten times as fast as US home prices. They’ve grown a whopping 29x faster.

Canadian Home Prices See Accelerated Growth

Canadian real estate prices have been on a tear, even just this year during a pandemic. The price of a home in Q1 2020 is up 2.4% from the previous quarter. Compared to last year, prices are up 3.4% once adjusted for inflation. Over the 12 months period, all of the annual growth came from just the two most recent quarters.

Canadian Real Estate Prices

An inflation adjusted index of Canadian real estate prices, vs the US.

Source: US Federal Reserve, Better Dwelling.

To contrast, US home prices made a much slower climb in the quarter, but still saw roughly similar growth. The price of a home in Q1 2020 was up 0.5% from the previous quarter. Compared to last year, prices are up 3.3% once adjusted for inflation. This was the slowest annual rate of growth for US home prices since 2013. While Canadian price growth is accelerating, US home price growth is decelerating.

Canadian Real Estate Prices Grew 29x Faster Than US Prices

Recent acceleration while the global economy slows down isn’t just a new phenomenon – it’s been happening since the Great Recession. Canadian home prices have increased a whopping 88% since 2005, almost doubling in 15 years. To contrast, US home prices have increased just 2.9% over the same period. In other words, Canadian home prices have increased 29x faster than US home prices. That’s adjusted for inflation as well.

Canadian home prices have increased at a breakneck speed, along with household debt. This isn’t just in major cities either, this is a national index. Cities like Toronto and Vancouver… and even smaller markets like Niagara, have likely over performed this rate of growth. Locals may not understand just how much prices have increased from up close, but if zoomed out against the global economy – it’s astronomical growth.

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22 Comments

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  • Jeremy 2 months ago

    lol. That’s nuts.

    • Trader Jim 2 months ago

      What’s nuts is how scared Canada is of diversification, it’ll pump taxpayer dollars to prop up inefficient industries.

  • Thomas H 2 months ago

    Canada doesn’t have another industry. Housing is the new oil. The government will triple down to make sure it keeps going.

    • MH 2 months ago

      In healthy environments housing and finance are in symbiotic relationship with the real economy. The problems begin when symbiotic relationship mutates into parasitic. Governments of all levels in Canada chose to nurture the parasite at the expense of the host of real economy concocting this bizarre idea that a bigger parasite will make the host better off.

      It does not work this way. When the host gives up the ghost the parasite follows.

      • Trader Jim 2 months ago

        Which is why even in the CMHC forecast, they don’t see prices correcting to fundamentals.

        Even still, the real estate industry finds the possibility of prices falling even a little preposterous.

      • Oakville Rob 2 months ago

        Interesting that between 2008-2013 the BoC Chief was Carney, that international financial superstar. I guess that parasite was his baby. Too bad it was nurtured to maturity by the vanilla Poloz who missed his chance to do the right thing.

        Scary thought that the environment is in Carney’s purview. We may be doomed all around.

        • zalzon 2 months ago

          That dude Carney jumped ship and joined the Central Bank in the UK.

          I find it interesting that both the present Bank of Canada chairman Steven Poloz and the head of CMHC Evan Siddall are jumping ship after having created a big mess.

          Poloz jumed into Enbridge as some high paid executive while Siddall is trying to get out while obfuscating about how CMHC is ‘helping’ Canadians despite dumping $150 billion of sub prime garbage mortgages banks created on taxpayers.

          These govt scam entities need to be ended and these con men sent to jail for deliberately indenturing the nation into debt servitude to banksters.

  • Mortgage Guy 2 months ago

    Big suburban buying boom right now. Remote work means people are looking to exit the city for a little more space.

  • David Rutherford 2 months ago

    Home prices in Niagara are still quite affordable.

  • straw walker 2 months ago

    In 2008 the US had the sub prime mortgage collapse.. Canada didn’t, instead CMHC had the 40 year mortgage with zero down mortgage.

  • flipgstring 2 months ago

    My Wife’s Neice & family immigrated to Vancouver from the Phillipines about 2005. “See that man pushing a shopping cart?” I tried to warn them. “He’s one of the richest people in Canada. He’s broke. The man across the street with a BMW and a big house owes $1,000,000.” Within a few years they had the big house the big cars, were financing fancy vacations with HELOCs – been carrying the big debt on their shoulders ever since. Stressful way to live.

  • yun yang 2 months ago

    No wonder personal debt is way up

  • JC 2 months ago

    Sooo prices are not coming down because people keep on buying at these crazy prices.

  • pondering 2 months ago

    The article says “Instead, Canada has flooded the market with a number of policies designed to increase the amount of debt households can carry”.

    Could you please shed a light on what these policies are? I’d be really interested in understanding this phenomenon better…

    Thank you!

  • Mark Sibthorpe 2 months ago

    No one has talked about massive immigration, foreign buyers or money laundering as house inflation drivers. For sure housing is the new oil, but without these other drivers the market would have collapsed years ago.

  • zalzon 2 months ago

    When taxpayers are forced to insure defaults on hundreds of billions of sub-prime mortgages
    via CMHC that banks profited from creating, what do you expect?

    This is deliberately done in the absence of any market pricing of risk of insuring that junk.

    Banks will make profits issuing junk mortgages as long as they are not on the hook to eat their losses when those mortgages default.

    The solution is simple. Banks should eat the loss on all mortgages they issue just like they pocket the profits.

    Anything else is just a scam.

  • Herry 2 months ago

    Corruption is legal in Canada and there probably is NOT one single white collar criminal in Canada’s prison system. Time to bring out the baseball bats…

  • Wesley Gunderson 2 months ago

    The author lacks understanding and is using cherry picked statistics and ignoring market realities.

    Canada didn’t GM have a bunch of sub-Prime mortgages in its market in 2005, the US did. Having their necessary correction in the stat makes the comparison useless.

    Canada has also increased is building and energy code significantly for n a northern climate. These real costs increase house pricing significantly.

    • Canadian Real Estate Developer 2 months ago

      Someone lacks an understanding, and it’s not the author. Real estate prices are weighted by market.

      > Canada didn’t GM have a bunch of sub-Prime mortgages in its market in 2005, the US did. Having their necessary correction in the stat makes the comparison useless.

      That’s an argument against your point. What you’re saying is Canadian home prices should actually be more than 29x gains if the US didn’t have subprime markets. You’re also likely ignorant of the fact studies show the US subprime narrative was overblown, and only composed 1.2% of prices gains, largely in the segment of PRIME borrowers.

      > Canada has also increased is building and energy code significantly for n a northern climate. These real costs increase house pricing significantly.

      Almost half of the US population lives in markets that saw similar (if not better) building and energy improvements. Toronto, Vancouver, and Montreal are half of the housing market. Hard costs aren’t up because of better codes. They’re up because we build more high rises than medium density, at the same time. This also inflates soft costs for development.

  • Curtis Mason 2 months ago

    Agree 100%

  • Mark 2 months ago

    You have to understand,there are quite a few moving parts which makes the housing market tick.

    First and foremost, the Real Estate Machinery. This consist of:

    1. Hundreds of Real Estate Boards (disguised as so called government regulated) but if you look deeper, it only protects the SELLERS period.

    2. Thousands of so called Realtors, who are nothing more then sales agents. 90% of them do not even sell a single property in a year. Secondly, they are brainwashed by the fake stats that their real estate boards feed them with every single month. And they use these fake numbers to show the public to give them the house price illusion.

    3. The BoC and their partner CMHC.

    4. The chartered banks i.e CIBC, RBC, TD etc who hand out 95% mortgages to broke new immigrants and locals alike with a payslip. And these banks buy insurance from CMHC (paid by the borrower) that in the likely event the borrower was to default on the mortgages. CMHC would bailout the banks so these mortgages are better than GOLD for the banks. They can never loose.

    5. The Media and the Acedemics which includes Economists etc, who front run the hype on behalf of the real estate Machinery and put out a narrative of the housing market is going up and there can never be any corrections.

    6. The real estate industry, house builders, materials suppliers etc who lobby the government’s to bring laws and regulations such as mortgage defferals, BoC buying up junk mortgages off the books of the banks. Provide tax payer funded help to schemes to boost the sale of unsold and or new inventory.

    7. The Provincial and Municipality who collect property transfer taxes and the Municipality s who collect property taxes. The developer lobby these levels of government’s to relax the planning permissions in favour of allowing new high density zoning so both the developers and government’s can multiply the tax revenues they can make from high rise condos, compared to single family homes.

    The list goes ON.

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