Credit: Leith Wheeler Investment Counsel Ltd.
Probable 30% Drop Coming in Price to Income Ratio of Canadian Housing
This chart of the ratio of House Price to Income comes from Thomas Holloway & Marcela McBurney at Leith Wheeler Investment Counsel Ltd.
They identified 48 distinct peaks in national price-to-income from 1970 to 2012 in 21 OECD Countries. The same "tent" formation occurs if the ratio is changed to price-to-rent but the plot for Canada starts even lower at 35% below the peak. For the right side of the tent to unfurl for Canada, either prices fall or incomes (or rents) have to rise. As you can see from the Case Shiller plot of price-to-income (dashed blue line), the U.S. model had more price drops and less wage inflation on the right side journey down. You can watch Canadian income (earnings) here.
History, Charts & Curated Readings
"Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement; and when experience is not retained, as among savages, infancy is perpetual. Those who cannot remember the past are condemned to repeat it." George Santayana Vol. I, Reason in Common Sense
"History, real solemn history, I cannot be interested in.... I read it a little as a duty; but it tells me nothing that does not either vex or weary me. The quarrels of popes and kings, with wars and pestilences in every page; the men all so good for nothing, and hardly any women at all - it is very tiresome." Jane Austen spoken by Catherine Morland in 'Northanger Abbey'