REAL PRICE of HOUSING of Vancouver, Toronto and Calgary Single Family Detached and the Bank of Canada $CAD Commodity Index and 5 Year Fixed Mortgage Rate
The chart above shows the "real price" of Vancouver, Toronto & Calgary SFDs when looked at from the point of view of the BoC Canadian Commodity Index (CCI) and Borrowing Costs (retail 5yr Mortgage) which are the main input costs apart from operating expenses and tax.
In June 2021 Canadian commodity prices approached a test of the 2014 highs as represented by the CCI (black plot line) along with crude futures spiking after hitting a historic negative print of USD -37.63 in April 2020.
Commodity driven real housing prices (solid coloured plots) continued down in all three metros plotted and only the Vancouver interest rate ratio (green dotted plot) ticked up with a new nominal price high.
Nominal housing price increases have been fuelled by very low inventory especially in 2017, 2020 and 2021 as well as the historic mortgage interest rate lows thanks to the Bank of Canada and two yield curve inversion sets since 2007-2009 crash.
The April 2020 total CPI print crashed to a negative -0.2% reading and on the May print it dropped to -0.4%. The most recent May 2021 CPI print came in at 3.6% (1 month lag) raising real world inflation fears.
When credit is a lifestyle employer as it has been in Canada, the demand in this environment for equity appraisers and margin clerks continues to grow.
The CCI train wreck into the March 2009 Pit of Gloom saw a 44% crash in just 7 months and the experiment of ZIRP to NIRP monetary policy from November 2007 to July 2017, combined with CMHC's out-of-control insurance scheme (also add in the BC Gov't Sub Prime Cash give-away) has been a terrible social experiment in the service of political power and it has replaced affordable housing with indentured mania. There must be a better way.
"Family matters have pressed upon my time and after more than 16 years of publication, I have transferred ownership of this website and database. Thanks to all my readers who have encouraged me over the years."
July 31, 2021
July 31, 2021
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