Here's What's Happening In North America's #1 Housing Bubble

ottawa skyline

Photo: Wikimedia Commons

Canadian home prices mirrored those in the U.S. as they surged from 2001 to 2008, then plunged during the global financial crisis.  Since 2009, however, they have once again been on a tear as U.S. home price have remained subdued.The person most responsible for the movement in Canadian home prices is probably Mark Carney, the now former head of the Bank Of Canada who was recently poached by the Bank of England.

Click here to see the Canadian housing market >

Carney has been praised for embarking on aggressive easy monetary policy in his effort to keep Canada from sinking with the rest of the global economy.

However, some are now concerned that his policies are reinflating a massive housing bubble.  Capital Economics warned that Canadian home prices will fall 25 per cent from here, and Robert Shiller warned that Canada looked like the slow-motion version of the U.S.housing bust.

Recent home price data shows that regulations have cooled the housing market a bit, causing some to argue that Canada’s housing market is nothing like America’s.

What follows is a review of how the Canadian housing market has evolved since 2001.  It should be noted that Carney took over the Bank of Canada in 2007.

2001: After years of moving sideways, home prices took off

2001: 2016 Nita Lane in Whistler, B.C. sells for a cool $10 million -- setting a Canadian record for the highest price ever paid for a residential home.

Source: Great Estates

JUNE 2005: 3552 Falcon Crescent sold for a record $11.2 million

Source: Great Estates

Q3 2006: Home prices climbed over 5 per cent on the quarter, the highest rate we've seen in the past eight years

2006: Listed for $8 million in 2001, 7425 Treetop Lane in Whistler declined in value for five years and sold for $6.3 million -- an outlier for the otherwise booming housing market.

Source: Great Estates

2008: In the wake of the global financial crisis, national average home prices began to tumble and then spiked higher mid-2009

Source: TD Economics

2008: 3330 Radcliffe Avenue, located in West Vancouver, sold for $28.8 million after the crash to Rexhall Pharmacies and Edmonton Oilers owner Darryl Katz. Before that, it sold for $17 million in 2004 and again for $30 million in late 2007 right before the market turned.

2009: The most expensive home in Toronto, at 32 High Point Road, sold for $11.8 million -- $2 million below the asking price.

Source: Metro News

2010: Home prices ranged from 4.7 to 11.3 times annual income. In the two decades before 2000 house prices were 3 to 4 times annual median income.

Q1 2012: Credit market debt-to-income ratio set a record at 152%

Source: Reuters

MAY 2012: Renowned Canadian singer Celine Dion listed her mansion, on the private island Ile Gagnon, Quebec, for just under $30 million in May, which makes it the most expensive residential property for sale in the province.

Source: National Post

Source: CBC News

OCTOBER 2012: National average price for homes was $351,516, up $80 from a year ago

The index of Canadian house prices far exceeds that of the U.S. at the peak of the housing bubble.

Source:

Some see this trajectory and think Canada's housing bubble is set to pop and prices will plunge 25%, while others think that home prices will deflate but Canada won't experience a U.S. style crash

Now see what's going on in Hong Kong's housing market...

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