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Feb. 17 2013 BARRIE McKENNA theglobeandmail.com
The correction underway in Canadian house prices is likely to persist for another two years, warns Bank of Canada Governor Mark Carney.
“We’ve seen the adjustment in the housing market. We think there’s a bit more to come over the next couple of years,” Mr. Carney told CTV’s Question Period in an interview broadcast Sunday.
Mr. Carney said rapidly rising prices experienced in Canada over the past decade are “certainly not normal” and Canadians shouldn’t count on home prices to be their main source of wealth gains.
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Jan 9, 2013 Chris Sorensen macleans.ca
Keith Roy began warning his clients about a faltering Vancouver housing market in early 2012. The realtor says he was tipped off not by industry statistics, but by chatter across backyard fences. “When you hear about a homeowner who thinks his neighbour got too much money when he sold his house, you know there’s something going on,” says Roy. “That was the first clue.”
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How real is Canada's housing bubble anyway? More real than any other country's.
Canada has a new worthwhile initiative. After years of booming prices, that bastion of politeness north of the border is looking to avoid a catastrophic housing bust for something more, well, boring. Initiatives don't get more worthwhile, and perhaps not more difficult considering Canada just might have the biggest housing bubble in the world right now.
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Oct 02, 2012 Julian Beltrame, CP vancouversun.com
Debt picture ‘eerily similar to the U.S. experience, just before their dramatic housing bust’
OTTAWA — Canadian households are even more in debt than anyone imagined, according to a revised Statistics Canada calculation that gives a more accurate picture of family finances.
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Oct 24, 2012 Mamta Badkar financialpost.com
Canada avoided many of the mistakes that the U.S. made in its housing market.
Banking regulations and lending standards have been much tighter, and that has prevented prices from getting completely out of control.
However, top economists including Robert Shiller and David Rosenberg are increasingly sounding alarms that the Canadian housing market is the next bubble and its about to burst.
Canadian home prices are up nearly 100% since 2000, according to Euro Pacific Capital. And there are other characteristics that do bear some striking resemblance to America’s housing boom-bust story. Moreover, this comes at a time when the nation’s economic outlook has become uncertain.
We put together a guide to Canada’s housing debacle on a national scale, and focused on Vancouver and Toronto in particular where homes have become increasingly unaffordable.
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Oct 3, 2012 Garry Marr financialpost.com
Organized real estate is unable, it seems, to admit the glory days may be behind it.
Sales plummet in major markets and the industry comes up with a new explanation for the decline, draping its comments with a sense that everything is just fine. The excuses are piling up.
This month’s gem comes from the Toronto Real Estate Board: It complained September didn’t have enough working days — too many weekends.
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The numbers are becoming increasingly clear; the bloom is off of the Canadian real estate bubble and boom.
Among a variety of indicators, sales of condos in the second quarter of this year in Toronto have fallen by half and a record number of units were left unsold. In Vancouver July residential sales were the lowest for any July in ten years and fell 11.2% from the month of June.
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Aug 02, 2012 Edwin Chan ca.reuters.com
SUNNYVALE, California (Reuters) - Canada does not expect to have to tighten mortgage rules further as the real estate market has softened in the wake of government measures to cool it down, Finance Minister Jim Flaherty said in an interview on Wednesday.
Home prices hit a third straight record high in June, extending a steady climb that had triggered fears of a property bubble. But a slowdown in the pace of price increases suggested to economists the red-hot housing market is cooling.
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July 30, 2012 The Canadian Press huffingtonpost.ca
TORONTO - Standard & Poor's Ratings Services has revised its outlook from stable to negative on seven Canadian banks over concerns about unsustainably high home prices and consumer debt levels.
The New York debt-rating firm revised its outlook downward on Royal Bank of Canada (TSX:RY), Toronto-Dominion Bank (TSX:TD), Bank of Nova Scotia (TSX:BNS), National Bank of Canada (TSX:NA), Laurentian Bank of Canada (TSX:LB), Home Capital Group Inc. (TSX:HCG) and Central 1 Credit Union.
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Jul 25, 2012 John Shmuel business.financialpost.com
A day after RBC put out a report saying that Toronto’s condo market is not in a bubble, Capital Economics has come out with its own report saying that Canadian housing, including Toronto, is most certainly in a bubble.
David Madani, economist with Capital Economics, said on Wednesday that Canada’s housing market is currently experiencing what appears to be a soft landing, but is, in fact, a bubble in the process of bursting.
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Jul 23, 2012 seekingalpha.com
For the past three years the Canadian Finance Minister, Jim Flaherty, and the Governor of the Bank of Canada, Mark Carney, have preached caution to Canadian households on the risks of excessive debt accumulation. Neither have gone so far as to declare an asset valuation "bubble" within the Canadian real estate market. However, both Minister Flaherty and Governor Carney have both addressed the issue publicly on a relatively frequent basis. Included below is a small sampling of their publicly made warnings from December 2010 to June 2012. Included in these statements is a recent one from June 21st in which Governor Carney addressed excessive mortgage related lending as "the number one... domestic risk to the Canadian economy":
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Jul 19, 2012 Chris Sorensen macleans.ca
There’s a theory that whenever someone plans the world’s tallest skyscraper—whether it’s the Empire State Building in the late 1920s or the Burj Dubai in the mid-2000s—a financial disaster can’t be far behind. But could the same be true when it comes to over-the-top condo projects in Canada, a country many believe is in the grips of a massive real-estate bubble?
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Jul 16, 2012 Business Insider financialpost.com
As the U.S. begins to recover from its housing bubble, concerns have been escalating about a housing bubble in Canada.
“Canada is carving out a top, while the United States is seemingly carving out a bottom,” writes Gluskin Sheff economist David Rosenberg.
Using three charts, Rosenberg points out the stark differences in the Canadian and U.S. housing market and the existence of a possible Canadian housing bubble.
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Jul 16, 2012 By Don Curren blogs.wsj.com
Many economists balk at using the “B-word” to describe Canada’s housing market. Gluskin/Sheff’s David Rosenberg doesn’t.
And remember, he was the guy who called the U.S. housing bubble.
In a report out this week, Mr. Rosenberg describes the different real-estate market landscapes on either side of the Canada-U.S. border–”bubble versus the rubble.”
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Jul 12, 2012 Theophilos Argitis Bloomberg News
Canadian Finance Minister Jim Flaherty’s efforts to avert a housing bubble are hastening the end of a six-year streak of outperforming the U.S. economy.
Changes implemented Tuesday include shortening the maximum length of government-insured mortgages to 25 years from 30 years to quell demand for new homes and curb record household borrowing that Flaherty said has become a greater risk to the economy than slowing growth.
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Jul. 09 2012 STEPHEN FOERSTER theglobeandmail.com
Many a child has delighted in popping a wad of Bazooka gum in their mouth, chewing vigorously, and then trying to blow the biggest bubble possible. The resulting end is inevitable – a sudden burst and then pulling the pink gum off their face.
Housing bubbles are not as much fun. But they can be just as sticky, messy and unpredictable.
Bubbles are as difficult to define as they are to spot. However here are a few definitions: Unsustainable patterns of price changes; deviations in prices that can’t be explained by fundamentals; and the mass refusal to acknowledge reason. We often don’t know with certainty that a bubble has existed until after it has burst.
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Jul. 05 2012 Tara Perkins theglobeandmail.com
Vancouver’s housing market is cooling to the point that the balance appears to be shifting in favour of buyers for the first time in years.
Prices in the country’s most-expensive real estate market remain stable, but activity has dropped sharply.
The number of sales in June, normally one of the busiest months of the year for home deals, dropped more than 17 per cent from May and 27.6 per cent below June, 2011, the Real Estate Board of Greater Vancouver said Wednesday.
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Jul. 04 2012 Tara Perkins theglobeandmail.com
A sharp decline in home sales in the Greater Vancouver area has tilted the market in favour of buyers, the local real estate board said Wednesday.
Sales of houses and apartments fell 17.2 per cent from May to June, and were 27.6 per cent below the level they were at in June of last year, according to the Real Estate Board of Greater Vancouver.
Just 2,362 properties changed hands in June, the lowest level for that month since 2000.
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Executive Summary
Canada's housing market is currently undergoing a rapid boom and its government is taking aggressive measures to curb its pace in an attempt to avoid the formation and consequent eruption of yet another housing bubble. In addition, high momentum of construction activity and an inability on the part of the government to increase borrowing costs is further adding to the problems. Meanwhile, after five years of a severe economic recession, the U.S. housing sector is demonstrating signs of recovery amidst low mortgage rates and high new home and pending home sales. Furthermore, the good operating results shown by homebuilders like KB Homes (KBH), Lennar Corp. (LEN), and Hovnanian Enterprises Inc. (HOV) in their recent earnings' releases, have streamlined the recovery phase of this sector. Given these two distinct market outlooks, a possible trading strategy might be long U.S. homebuilders and short Canadian Residential REITS or mortgage lenders.
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Bubble Articles