CANADA: Vancouver, Calgary, Edmonton, Toronto, Ottawa & Montréal
CLICK for Canadian Housing Price Chart
This chart shows the average detached housing prices for Vancouver, Calgary, Edmonton, Toronto, Ottawa* and Montréal* In May 2013, Vancouver prices remain on support while Montreal, Toronto and Calgary zoom to new highs. But on the Momentum Chart Calgary and Toronto continue to drift towards the zero momentum flat line while Vancouver tries to get back onto a positive footing having spent most of this past year flirting with "Extreme Fear". (*Ottawa data are combined residential; *Montreal are median not average).
Calgary Detached SFD, Town House and Condo Prices
CLICK for Calgary Housing Chart
This chart shows average Calgary Detached SFD, Townhouse and Condo prices. In May 2013, detached house prices broke out again to a new peak price as did the condo market with townhouses not far behind. A driver of spirits is the huge breakout in earnings that are 22% above the national trend and a whopping 36% above Quebec. Y/Y sales remain high while Y/Y listing supply remains very low (Scorecard). Readers on this site are the least downcast on Calgary housing relative to Vancouver and Toronto. What's your opinion? VOTE HERE.
NOTE: Condo data from July 2006 to November 2010 are CREB combined Strata.
NOTE: Condo data from July 2006 to November 2010 are CREB combined Strata.
Toronto Detached SFD, Town House and Condo Prices
CLICK for Toronto Housing Chart
This chart shows average Toronto Detached SFD, Townhouse and Condo prices. In May 2013, detached house prices struck another new record high as did townhouses and condos for a rare trifecta. But this hat trick does have some red to overcome on the scorecard with Y/Y sales pointing to fewer buyers and growing inventory. The comparison of Vancouver vs Toronto may provide a sporting tip, and if you are a Toronto market watcher, VOTE HERE; let's see what you think average SFD prices will be one year from now.
NOTE: Toronto Strata Unit Data changed from median to average at August 2011 and Toronto GTA - SFD average prices began March 2009. Prior SFD data points are actually combined residential + 24.5% which is the average percentage difference between combined residential and SFD over 24 months from March 2009 through February 2011.
NOTE: Toronto Strata Unit Data changed from median to average at August 2011 and Toronto GTA - SFD average prices began March 2009. Prior SFD data points are actually combined residential + 24.5% which is the average percentage difference between combined residential and SFD over 24 months from March 2009 through February 2011.
Vancouver Detached SFD Detached, Town House and Condo Prices
CLICK for Vancouver Housing Chart
This chart shows average Vancouver Detached SFD, Townhouse and Condo prices. In May 2013, detached house prices continued resting on support with an up tick of 0.4% M/M while strata units ticked down 0.1% M/M and remained range bound trading at 2007 pricing. The detached SFD Eiffel Tower pattern is taking time to render the right side of the down slope, but according to The Vancouver Price Drop the downside takes 2-3+ years based on the U.S. experience.
If you are thinking of buying a Vancouver Condo as an Investment, see my Vancouver Condo Yield Case Study to see why the smart money is selling, not buying.
The sentiment polling is giving us a very bearish view (88% more bears than bulls) about the next 12 months; cast your opinion every month, VOTE HERE
The bearish sentiment is well founded. Average earnings in BC (Earnings Chart) hit a ceiling last month and now are 4% below the national average, 5% below Ontario and 21% below Alberta earnings. It takes 3.5 average BC wage earners (ménage à trois et demi) to buy an average Vancouver SFD (Affordability Table).
The "Green Hornet" keeps a Youtube video archive of Vancouver Real Estate News and An Observer is documenting the Vancouver Price Drops while the Village Whisperer pulls back the curtain on Vancouver's borderline personality disorder. Also The VREAA who aggregates the word on the street at the Vancouver Real Estate Anecdote Archive is back from an April 2013 publishing break.
If you are thinking of buying a Vancouver Condo as an Investment, see my Vancouver Condo Yield Case Study to see why the smart money is selling, not buying.
The sentiment polling is giving us a very bearish view (88% more bears than bulls) about the next 12 months; cast your opinion every month, VOTE HERE
The bearish sentiment is well founded. Average earnings in BC (Earnings Chart) hit a ceiling last month and now are 4% below the national average, 5% below Ontario and 21% below Alberta earnings. It takes 3.5 average BC wage earners (ménage à trois et demi) to buy an average Vancouver SFD (Affordability Table).
The "Green Hornet" keeps a Youtube video archive of Vancouver Real Estate News and An Observer is documenting the Vancouver Price Drops while the Village Whisperer pulls back the curtain on Vancouver's borderline personality disorder. Also The VREAA who aggregates the word on the street at the Vancouver Real Estate Anecdote Archive is back from an April 2013 publishing break.
|
|
The Vancouver Bubble Deflator CLICK TO ENLARGE VANCOUVER DEFLATOR
In my select study, sellers are pricing high. 95% of these urban listings are still listed over $750,000. Listings available on the prime west side remain at elevated price levels driven by hopeful sellers looking for
credulous buyers.
|
Compare Vancouver & Toronto Detached, T-House and Condo Prices
CLICK for Vancouver and Toronto Comparison
This chart shows the average Detached Single Family Dwelling, Townhouse and Condo prices of both Vancouver and Toronto. In May 2013, the spread between Vancouver and Toronto average SFD prices narrowed to 36% more expensive for a Vancouver detached house. Townhouses and condos are also more expensive by 15% and 4%. At the peak in April 2012, Vancouver SFDs were an astounding 64% (1.6 times) more expensive than Toronto GTA comparables. The Knight Frank study showing the proclivities of the rich have Toronto in a new ascendant position.
Rate of Change Y/Y Vancouver, Calgary, Toronto and TSX Real Estate
CLICK for Rate of Change Momentum Chart
This chart shows the year over year rate of change in the price of Vancouver, Calgary, and Toronto detached housing as well as the S&P TSX Real Estate Index. In May 2013 Toronto price momentum remained slack despite the trifecta price surge. Likewise in Calgary, the current joy in price did not budge the momentum meter away from the zero flat line. Vancouver momentum has reversed to the upside away from "Extreme Fear". The last time the TSX bulls failed to break out (May 2007), eighteen months later investors found themselves at the Get Me Out Level (down 40% Y/Y). This time, everyone is tweeting so I expect the swoon to be more dramatic. You can follow my tweets here and you can vote here.
TSX Real Estate, Gold, Energy, Financial Services Indexes and CRB
CLICK for TSX Indexes Comparison Chart
This chart shows the S&P TSX Real Estate, Gold, Energy and Financial Services Indices as well as the Bank of Canada Commodities Index (CCI) all valued in CA$. In May 2013 Gold slumped again and for the first time since November 2008 when gold broke out to the upside, it has dropped decisively below all three comparative indexes; energy, real estate and financials. The Bank of Canada Commodities Index ticked down from resistance that has been in place for the last 2 years.
Let's make a note here that March 2013 is when the Eurozone introduced its bank "bail-in" template for Cypriot investors or in common parlance, a Bernie Madoff bailout scheme. The question is, will Canadian asset prices be jacked up via Eurozone and Russian capital flight as it has with the Asian carry? Well it is showing up at the whale level as high net wealth individuals go short cash and long real estate on a bet that inflation continues in the hot Canadian markets. But on the other side, one feature of a massive global post bubble deflation is debt revulsion. In Japan during their decades long contraction, savings increased as investors repaired their balance sheets.
Let's make a note here that March 2013 is when the Eurozone introduced its bank "bail-in" template for Cypriot investors or in common parlance, a Bernie Madoff bailout scheme. The question is, will Canadian asset prices be jacked up via Eurozone and Russian capital flight as it has with the Asian carry? Well it is showing up at the whale level as high net wealth individuals go short cash and long real estate on a bet that inflation continues in the hot Canadian markets. But on the other side, one feature of a massive global post bubble deflation is debt revulsion. In Japan during their decades long contraction, savings increased as investors repaired their balance sheets.
Vancouver, Calgary and Toronto Detached Housing Priced in Gold
CLICK for Gold Values Millionaire Metric Chart
This chart shows Vancouver, Calgary and Toronto detached housing priced in ounces of gold valued in CA$. Bullion attracts investment when credit markets contract because of its classic use as a hedge against currency depreciation and its ability to act as money, a store of value. The Millionaire Metric allows you to see what your dollar is worth and the (declining) amount of gold you need to be a millionaire. In May 2013 the spot price of gold continued to plunge driving the cost of real estate up in relation. So far it's been a year and a half correction. In terms of value it requires 36% less gold to be a millionaire than it did 5 years ago.
Ratios of Gold, Commodities and TSX Real Estate - The Real Price
CLICK for "The Real Price" Ratios Chart
This chart shows the "Real" price of gold (Gold/CCI) and the real price of real estate (RE/CCI). Gold miner's profitability depends on the nominal price of gold and the cost of getting the metal out of the ground. When the cost (fuel, and industrial materials) goes down, the real price rises even in the absence of a nominal price rise. Gold mining share prices rise as the real price of gold rises eg: the Gold/Commodities Ratio because the commodity cost (fuel, materials, equipment) is falling against the nominal price. See the Homestake Mining Chart from 1924 to 1935.
Housing is a bundled commodity (lumber, steel, copper, materials, fuel to get to the site) and the TSX-RE/CCI ratio (green dotted line) plunged with the spike in oil prices in 2008 as did the real price of gold (dotted yellow line). But by the end of the 2007-09 crash the real price of gold zoomed with the BoC ZIRP policy and the real price of TSX real estate rallied but on a much more subdued trend. The real price of gold continues to outperform real estate despite the correction in the nominal spot price of gold. A falling CCI is excellent for gold miners and ultimately good for long term house buyers as the replacement value for real estate falls with the CCI.
Housing is a bundled commodity (lumber, steel, copper, materials, fuel to get to the site) and the TSX-RE/CCI ratio (green dotted line) plunged with the spike in oil prices in 2008 as did the real price of gold (dotted yellow line). But by the end of the 2007-09 crash the real price of gold zoomed with the BoC ZIRP policy and the real price of TSX real estate rallied but on a much more subdued trend. The real price of gold continues to outperform real estate despite the correction in the nominal spot price of gold. A falling CCI is excellent for gold miners and ultimately good for long term house buyers as the replacement value for real estate falls with the CCI.
The "Real Price" of Vancouver, Calgary & Toronto Real Estate
CLICK for "Real Price" of Real Estate Chart
This Chart shows the "real price" of Vancouver, Calgary and Toronto SFDs when looked at from the point of view of the CCI (BoC Canadian Commodity Index) and Borrowing Costs which are the main input costs apart from operating expenses and tax.
If borrowing costs remain at historic lows and the CCI drops with any drop in the nominal price, then this chart will keep the real estate bulls happy as the real price will remain elevated. Low rates and muted commodity prices are keeping the bears at bay.
If borrowing costs remain at historic lows and the CCI drops with any drop in the nominal price, then this chart will keep the real estate bulls happy as the real price will remain elevated. Low rates and muted commodity prices are keeping the bears at bay.
"Real Interest Rates" (Rate less CPI) and TSX Real Estate Index
CLICK for "Real" Interest Rate Chart
This chart shows that in May 2013 the real CAD interest rates as defined by the rate less CPI continued ticking up with the CPI dropping from 1% to 0.4%. Short and long real rates are both back in positive yield territory but still very low historically and they will continue to turn investors into speculators with the accommodation of lenders to leverage very cheap money to produce capital gains on a bet of never ending price "inflation" of stuff (stamps, coins, jewellery, cars, real estate and cities). Hey what about risk? Think California, Florida, Japan, Dubai, Greece, Ireland, Spain and Japan where decades of low rates did not stop decades of real estate price destruction and asset repricing. Low rates destroy savings and force the private sector to chase yield on risk assets instead of productive investment.
Interest Rate Spread between BoC Rate and 5 year Fixed Mortgage
CLICK for Interest Rate Spread Chart
This chart shows that in May 2013 the spread between the Bank of Canada rate and the residential 5 year fixed mortgage remained at 4+ year lows thanks to ZIRP and CMHC. Penny pinching 'conservative' Canadian martyrs have been watching their savings evaporate while their fearless brethren have been all in for the big capital gain real estate flip. NOTE to the flash mob: CRA is auditing; make sure you file that gain. The Government policy of urging Canadians to borrow at low rates and spend at high cost (rather than promoting skill acquisition to become productive) has been a tax on savers and an attack on skilled labour. Notice how the TSX RE Index is correlating with the spread between the BoC and the 5 year retail mortgage rate. If this spread widens as it did from April 2007 to Dec 2008, will the TSX Real Estate Index drop?
Here is a case study of what a Vancouver investor is facing when contemplating the purchase of an average condo for the purpose of rental revenue. Interest rates may be low, but the capital cost according to my case study is 25% too high.
Here is a case study of what a Vancouver investor is facing when contemplating the purchase of an average condo for the purpose of rental revenue. Interest rates may be low, but the capital cost according to my case study is 25% too high.
Yield Curve: 1mo, 2yr, 10yr, 30yr, BoC and 5 yr Fixed Mortgage
CLICK for Yield Curve Chart
This chart shows the 10 Year Less the 2 Year Canadian Bond Yield Curve (dotted yellow line) as well as the 1 month, 2 year, 10 year and 30 year Bank of Canada treasury yields and the retail 5 Year Fixed Mortgage Rate. In May 2013 the 10yr less the 2yr rate (yellow dashed) ticked up to a 100 basis point spread; not much but widening is tepidly on.
Also the 30 year yield cycle (white dialogue box) is broken with the current leg extending into 32 years. Is this Japanada?
Also the 30 year yield cycle (white dialogue box) is broken with the current leg extending into 32 years. Is this Japanada?
Polling Results of where YOU think average Vancouver, Calgary and Toronto SFD prices will be one year from now.
CLICK for Polling Questions & Results
|
POLL RESULTS ARE HERE
May 31/13 Poll based on April Data: If you ignore the "No Change" and calculate the difference between the total "Ups" and total "Downs" then the opinions are:
- Vancouver 88% bearish - Calgary 36% bearish - Toronto 74% bearish A plurality opines that a 20% drop will unfold. |
