Canadians are now so used to large home price gains, that frothy returns just look normal. BMO senior economist Douglas Porter gave a little perspective, by looking across Lake Erie. In Cleveland, home prices are rising rapidly and beginning to look a little frothy for the market. On the Canadian side, prices in St. Thomas and London increased over 3x the rate of Cleveland.
Cleveland Home Prices Are Up 12.5%
Porter points to Cleveland real estate prices, which made its fastest climb ever. Year-over-year growth reached 12.5% in March. Porter says, “that’s a faster rise than anything seen in more than 30 years in Cleveland, including the prior housing boom around 2005.”
Across The Lake, Prices Are Growing Over 3x Faster
Porter urges people to, “take a peek at what’s unfolding on the other side of Lake Erie.” In St Thomas and London, home prices have increased more than 43% in March, from a year before. His analysis shows this works out to an increase of more than CA$190,000 over just one year. “Prices in London/St. Thomas didn’t rise that much in the three decades of the 1980s/1990s/2000s combined.”
Cleveland Looks Stable Compared To Canadian Markets
Cleveland’s frothy home price gains look almost like a calm and stable market in contrast to Canada. Generally, home prices rising 6x sets off alarm bells. Future buyers will have to devote more of their income to shelter costs. This tends to stifle long-term economic growth, in favor of short-term gains. That’s not something considered in Canada, where prices grow 20x inflation, with few noticing.
BMO has been increasingly calling out market exuberance on a number of levels. In one recent analysis, they said Canada is approaching a “classic bubble.” Just yesterday, a different analyst at the bank warned the market may form a “crest” soon. So buyers at this point should make sure they really like their home.
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A lot more than just St Thomas. Look at Niagara.
Niagara Falls 5-Bedroom in a nice neighborhood: US$349,900
https://www.zillow.com/homedetails/715-Seymour-Ave-Niagara-Falls-NY-14305/31437126_zpid/
Niagara Falls, Canada 5 bedroom in a nice neighborhood: CAD$999,990
https://www.zillow.com/homedetails/7353-Lionshead-Ave-Niagara-Falls-ON-L2G-0A6/2071555120_zpid/
I’m now at the stage where I want to send my kids to America, for a better life. It feels like I’m back in a communist country.
Right, but then add healthcare and private school.
The $650K difference in home prices cannot be explained by having to pay for healthcare. Not even close. The “yabut healthcare” argument has been used to excuse every Canadian mediocrity and policy failure for the last 40 years. We should probably stop doing that. We do ourselves a disservice when we fall prey to such lazy arguments.
Healthcare and public schools is just a misinformation marketing in Canada. The cost of these comes out from the high taxes in Canada. Unless someone is not paying taxes, then yes healthcare and schooling is free in Canada.
Also, it’s not just the cost of housing, daily living is so much more expensive in Canada. Canada has lost it’s edge in every aspect – degrading healthcare, lowering quality of live, increase in crime rate, increase in corruption,…
The numbered corporation from Russia or the Far East generally don’t pay taxes while they study as “students” driving that Lambo or Ferrari on the UofT Scarborough campus.
U.S. healthcare isn’t nearly as bad as Canadians think it is. The US limits insurance costs to 8% of your income, and the uninsured are 100% covered. It’s essentially the same at this point.
Everyone is comparing it for obscure services, not realizing in Canada many of those services would never be accessible.
Top notch health care for the entire family would set you back about 450 a month meaning with what you save you could buy 1445 years of coverage. Also with that coverage there is no waiting on anything. I suspect that you have no clue as to how good private insurance coverage is.
add much less taxes, less cost of living, higher incomes, a lot of employers giving health insurances ( better care in outpatient and inpatient facilities!
Schools have great AB/AP programs ( for free)
Agree with the below that it is a response that shows ignorance in the system. In the US if you live in a HCOL state the public school system is generally outstanding. If not, the private Catholic schools are much more affordable than you would think. Also, health insurance (as noted below) is really not that much. Out of pocket maximums are guaranteed with coverage and despite media horror stories, hospitals cannot refuse care and low income people are fully covered. Not a perfect system, but definitely not worth a difference in the average house price of $300k (national average to national average). End of the day, there is no such thing as “free” when it comes to health care, education or any services – you pay one way or the other. What you need to consider is Canada is pushing all of it’s chips into housing; US is lagging the Canadian growth and the media here is already complaining about a bubble. The US learned its lesson in 2008; Canada still treats real estate as a risk-free investment class.
Disinformation.
Canadians pay for healthcare by taxes, Americans pay by private health insurance. Obama was good to enact laws to give low-income Americans subsidized or free healthcare.
And deduct mortgage interest and lower taxes!! I can buy a lot of private school and health care in return for the taxes I would not pay.
No. We pay for health care and schools by having higher taxes than them. Which I’m fine with. This is a whole other thing
When I look across the lake I don’t see Cleveland I see the Mohawk Territory.
When I look across several lakes what do I see? I see the neighbors across the lake from the same town.
Canada has thousands upon thousands of lakes. Toronto isn’t the center of the universe in Canada.
Why does the media always click bait the people? It’s weak.
The banks and outlet are from Toronto. If I say “across the street” and I’m talking to someone in my neighborhood, I don’t expect someone that’s visiting from another city to say “what street?”
This isn’t the media click baiting. It’s internet randos wondering why the world doesn’t revolve around them.
One of them has a pool! You can probably guess which one doesn’t. lol.
Wow…. That is just insane. But many Canadians (especially home owners) I talk with feel that this housing market is fine.
USA is a great country. Your kids would be better off if they did make the move.
All the best to you.
Do bank economists know there’s a country outside of Ontario?
You do realise British Columbia and most of Canada is experiencing the same insane exhuberance? They used Ontario as an example….
So the Leafs are first place this year and the nucks missed the playoffs… Get over it…