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
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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.
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In December 2020 Canadian commodity prices pushed up above the 2Q 2018 high as represented by the CCI (black plot line) with crude futures spiking after hitting a negative print of USD -37.63 in April. Commodity driven real housing prices (solid coloured plots) in Toronto, Calgary and Vancouver plunged as a result. The April total CPI print crashed to a negative -0.2% reading and on the May print it dropped to -0.4%. The November CPI print ticked up from 0.7% to 1%. |
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Counter to commodity deflation, the USD/CAD inflation since 2012 inflates our USD denominated import prices. On the interest rate side, mortgage rates remain at the lows (and ticking lower) supporting those "real" housing price dotted plots.
The yield curve inversion of the 10yr less 2yr bond yield spread marked its 8th consecutive print in February 2020 and since then has put in 10 positive prints but the novel coronavirus has now made recession an inevitable result in Canada as the energy sector remains on mute and the fear of a viral infection forces physical distancing behaviour.
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 yield curve inversion of the 10yr less 2yr bond yield spread marked its 8th consecutive print in February 2020 and since then has put in 10 positive prints but the novel coronavirus has now made recession an inevitable result in Canada as the energy sector remains on mute and the fear of a viral infection forces physical distancing behaviour.
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.
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