COMPARE PRICES in $CAD and $USD for Single Family Detached Houses in Vancouver, Toronto and Calgary with FX and Crude Oil Notations
Black Square data points are WTI Crude Oil in USD/Barrel plotted semi-annually. Notation Sources: CAD USD and WTI Crude
In December 2020 a single family dwelling in the hot metros of Vancouver, Calgary and Toronto came in at 22% cheaper if purchased in USD as opposed to CAD.
They were 28% cheaper in February 2016 and at the March 2009 Pit of Gloom, prices were 21% cheaper in USD.
Clearly the run-a-way train that was housing price inflation was on the rails of energy price inflation that was set on course after the relatively benign two year period of 2001 and 2002 when the spot price of crude traded in a US$10 range between 20 and 30 bucks.
The ensuing commodity price spike blew out first in oil and housing in 2007-08 with the propellant of a low CAD exhausting itself at par at the 2008 peak.
Going into the March 2009 crash the FX spread widened to 21% cheaper Canadian housing in USD and then the tracks were replaced with slick new central bank high speed ZIRP rails and housing no longer needed to catch a ride on the commodity train but went air borne on a maglev of credit.
The current USD strength is growing and energy prices are facing resistance. As recorded in the chart above when the price of oil drops, housing prices eventually follow.
Enthusiasts for Canadian housing denominated in CAD may have now come to realize that a switch has been thrown. Calgary housing values have been shunted onto a siding. The brakemen have a job ahead of them in Toronto, and Vancouver.
TradingView The US Dollar vs. the Canadian Dollar is a very popular currency pair due to the extremely large amount of cross border trading that occurs between the U.S. and Canada.
The CAD is considered to be a commodity currency because of the large amount of natural resources, especially oil, that are mined and exported to southern neighbors. The USDCAD is one of the most traded currency pairs in the world.