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 April 2013, Vancouver prices remain on support after the plunge from the April 2012 peak comparable to the 2008-09 rout (Plunge-O-Meter). Toronto, Calgary and Edmonton have all met resistance near their highs. On the Momentum Chart Calgary has suddenly turned down joining Toronto in heading towards the zero momentum flat line while Vancouver is deeply negative. (*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 April 2013, detached house prices curled over at what appears to be major resistance of the high set two months ago. Momentum strength concurs as it suddenly turned down (Momentum Chart). Townhouse and condo prices echoed the same resistance to any further breakout in price. The real breakout has been in earnings that are 21% above the national trend (32% above Quebec). This summer will be a big test, and so far Y/Y sales are high while Y/Y listing supply is low which should support prices (Scorecard). Readers on this site are the least downcast on Calgary pricing 12 months out 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 April 2013, detached house prices ticked down after setting a new record high on the previous month while townhouse and condo prices were held back at their highs as well (Scorecard). The near term enthusiasm of Toronto buyers is dampened by the negative Y/Y sales and the continuation of eroding momentum on the SFD Y/Y price chart as demand slumps at the flat line. Combined residential inventory continues to build at 13.5% Y/Y and M/M. For more contrast, see the comparison of Vancouver vs Toronto 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 April 2013, detached house prices continued resting on support with an up tick of 0.8% M/M. So far the loss of equity since the peak one year ago is 14.2% ($157,900). This compares to the panic correction into March 2009. Both corrections have happened in similar time, velocity and percentage drop. Will this pause mark the end of the right side of the Eiffel Tower sell off? Data from other markets suggest otherwise. According to The Vancouver Price Drop the downside takes 2-3+ years based on the U.S. experience. 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) have hit a ceiling of resistance and have been lagging behind the national average since the 2008-09 financial blowout. March unemployment data puts the BC rate at 7% and 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 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. Note: The VREAA who aggregates the word on the street at the Vancouver Real Estate Anecdote Archive is taking a break from publishing (April 16, 2013).
The bearish sentiment is well founded. Average earnings in BC (Earnings Chart) have hit a ceiling of resistance and have been lagging behind the national average since the 2008-09 financial blowout. March unemployment data puts the BC rate at 7% and 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 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. Note: The VREAA who aggregates the word on the street at the Vancouver Real Estate Anecdote Archive is taking a break from publishing (April 16, 2013).
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The Vancouver Bubble Deflator CLICK TO ENLARGE VANCOUVER DEFLATOR
In my select study, sellers are pricing high. 96% of these urban listings are still listed over $750,000. Listings available on the prime west side remain at elevated price levels driven by hopeful sellers looking for
credulous buyers.
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Compare Vancouver & Toronto Detached, T-House and Condo Prices
CLICK for Vancouver and Toronto Comparison
This chart shows the average Detached Single Family Dwelling, Townhouse and Condo prices of both Vancouver and Toronto. In April 2013, the spread between Vancouver and Toronto average SFD prices widened to 39% more expensive for a Vancouver detached house. Townhouses are 16.6% more expensive in Vancouver while condo prices surged in Toronto and narrowed the gap to a 4.7% difference. At the peak in April 2012, Vancouver SFDs were an astounding 64% (1.6 times) more expensive than Toronto GTA comparables. The Knight Frank study showing the proclivities of the rich have Toronto in a new ascendant position.
Rate of Change Y/Y Vancouver, Calgary, Toronto and TSX Real Estate
CLICK for Rate of Change Momentum Chart
This chart shows the year over year rate of change in the price of Vancouver, Calgary, and Toronto detached housing as well as the S&P TSX Real Estate Index. In April 2013 Toronto price momentum dropped again and is within a snick of the flat line. Calgary price momentum suddenly plunged and appears to be headed back to the flat line where it has oscillated since the summer of 2010. Vancouver momentum continues to hover above Extreme Fear. The last time the TSX bulls failed to break out (May 2007), eighteen months later investors found themselves at the Get Me Out Level (down 40% Y/Y). This time, everyone is tweeting so I expect the swoon to be more dramatic. You can follow my tweets here and you can vote here.
TSX Real Estate, Gold, Energy, Financial Services Indexes and CRB
CLICK for TSX Indexes Comparison Chart
This chart shows the S&P TSX Real Estate, Gold, Energy and Financial Services Indices as well as the Bank of Canada Commodities Index (CCI) all valued in CA$. In April 2013 Gold slumped again and for the first time since November 2008 it dropped decisively below the energy and real estate indexes barely above the financials. The Bank of Canada Commodities Index has been rising on a slumping CAD/USD pair as the U.S. Dollar rally puts pressure on a lot of orthodox positions. We should note that March 2013 is when the Eurozone introduced its bank "bail-in" template for Cypriot investors. In common parlance, bank accounts are akin to a Bernie Madoff deposit scheme. Will Canadian asset prices be jacked up via Eurozone capital flight as it has with the Asian carry? It is showing up at the whale level. 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. These are volatile times.
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$. 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. 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 April 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 39% 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. 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. 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 are keeping the spirits elevated.
"Real Interest Rates" (Rate less CPI) and TSX Real Estate Index
CLICK for "Real" Interest Rate Chart
This chart shows that in April 2013 the real CAD interest rates as defined by the rate less CPI continued ticking up with another step down in CPI to 1%. 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 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 April 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. Globally everyone is doing it, and it is not going that well. Look at Ireland, Spain and California (the list goes on). On the other side, Monetary Zirpitude is a reminder that there is really no rush or panic to take on debt when asset prices are falling and rates remain boot suppressed. 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?
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 the spring and summer of 2004 the 10's less 2's renewed its trend to narrowing as the demand for speculative short term money ballooned and the curve set off on a path towards inversion igniting along the way a 3-4 year buying spree of over-leveraged assets, (commodities, real estate, junk bonds). In the Spring of 2007 the 10yr less the 2yr went negative as the party continued except in Alberta where nominal prices first peaked. In the spring of 2008, the curve moved up as short administered rates plummeted against firming long rates and the financial markets and real estate headed into the spring 2009 pit of despair. In April 2013 the 10yr less the 2yr rate (yellow dashed) ticked back down to the lower range of its year long flat trend. 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
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POLL RESULTS ARE HERE
APR 30/13 Poll based on MAR data.
If you ignore the "No Change" and just compare the difference between total "Ups" and total "Downs", opinions are: - Vancouver 88% bearish - Calgary 36% bearish - Toronto 75% bearish A plurality opines that a 20% drop will unfold. |
