…Canada’s housing markets barely dipped during the financial crisis when U.S. housing markets ran into deep trouble…but now, after an 18-year housing boom, the downturn has arrived in Vancouver and Toronto, among the formerly hottest housing bubbles in the world, so let’s compare how the housing bubbles there stack up against the legendary…housing bubble in San Francisco.
…The Teranet-National Bank House Price Index tracks single-family house prices, based on “sales pairs,” similar to the S&P CoreLogic Case Shiller index for U.S. housing markets. It compares the sales price of a house in the current month to the prior sale of the same house years earlier…
This housing market had been on an extraordinary ride: From January 2002 to the peak in July 2018, the index skyrocketed 316% – meaning that prices more than quadrupled – and some of those gains are now unwinding:
Vancouver house prices completely blew away the legendary mind-boggling housing bubble in the San Francisco Bay Area where house prices soared 121% from 2002 through the peak in September 2018:
From January 2002 through the peak in July 2017, the index soared 218% – meaning that house prices more than tripled. Note the totally crazy spike from January 2016 through July 2018, topping out at a 40% year-over-year gain:
Here’s the Teranet index for Toronto house prices as compared to the housing bubble in the San Francisco Bay Area:
Note how Winnipeg and San Francisco surged at the same pace from 2002 until 2007, when San Francisco’s housing market came unglued:
The Teranet House Price Index for the metropolitan area of Montreal inched up to a new record in March and is up 159% from January 2002, without having experienced a noticeable dip over the 18 years:
The Calgary housing market is dominated by oil booms and oil busts. When the price of oil collapses, the housing market goes south. House prices surged through the oil boom till mid-2007. When the price of oil collapsed, house prices went south. This was followed by another oil boom that powered the index to a new peak in October 2014, up 140% from January 2002. Then, as oil prices collapsed, house prices began to drop.
These house price indices are based on “sales pairs” measure how the price of the same house changes over time – a house that didn’t grow in size or opulence…The “sales pairs” indices are a measure of house price inflation, which completely spiraled out of control in Canada’s hot housing markets.
(San Francisco Bay Area House prices are down -4.3%, condo prices -5.7% since July; Seattle house prices -5.9%, most since Housing Bust 1; Los Angeles, San Diego, Denver, Portland, New York condos, Boston decline. Dallas ticks up. Read… The Most Splendid Housing Bubbles in America Deflate Further)