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Aug 30, 2023 · An analyst who describes Canada as sitting on one of 'the largest housing bubbles of all time' warns that if it bursts, the country could be thrown into a deeper recession than forecasted.
- Residential Investment Is Great Until It Swallows Your Economy
- Sharp Drops in Residential Investment Precede Sharp Corrections in Home Prices
- Canada’s Economy Was More Dependent on Housing Than The Us in 2006
- Canadian Real Estate Might Not Bottom Until 2025
- Canadian Residential Investment vs Real Home Price
- Canada’s Real Estate Bubble Typically Pops with A Drop This Big
Residential investment is the contribution to GDP made by housing investment. It includes new housing construction and major renovations, as well as some services. It’s the most direct contribution to GDP, but far from the whole impact. Related industries like finance and construction are strongly influenced by housing too. Residential investment g...
The BIS, a central bank for central banks, produced aworking paperconfirming this. They found residential investment surged relative to GDP before spikes in home prices. A decline in the share is typical of real home price growth decelerating. On average, they found a recession occurs 2 years after investment contracts. Home prices also fell for an...
Canada’s residential investment is falling almost as fast as it increased. It represents 6.7% of GDP in Q3 2022, down 0.4 points from the previous quarter, and 0.9 points lower than last year. It remains at a level that was thought to be unusually high for the US, but it’s coming down sharply.
It’s not just interest rates either. The share of residential investment peaked at 8.7% in Q1 2022, and fell 1.1 points in the year leading up to rate hikes. Annual real home price growth peaked one quarter after, according to US Fed research. A ballpark estimate using average timelines in the research would see a recession next quarter, and real h...
Canadian residential investment as a share of GDP compared to the annual percent change in real home prices. *correction period is peak to trough for real home prices following a real estate bubble. Source: Statistics Canada; US Federal Reserve; Better Dwelling.
How does this hold up historically? Canada had two major real estate bubbles with sharp corrections—one in the early ’80s and early ’90s. The early ’80s bubble saw residential investment peak in Q2 ’81, and home prices a quarter after. The correction lasted peak to trough for nearly 4 years, close to the average. The ’90s real estate bubble saw res...
Aug 29, 2023 · Canada Could Be Sitting On “Largest Housing Bubble Of All Time” — What Will It Take To Burst? An international strategist points to a perfect storm of stretched house prices, weak affordability, and over-leveraged mortgage borrowers characterizing the Canadian housing market.
- Zakiya Kassam
The Canadian property bubble refers to a significant rise in Canadian real estate prices from 2002 to present (with short periods of falling prices in 2008, 2017, and 2022) which some observers have called a real estate bubble.
Jan 6, 2022 · Canada’s housing market is sick and grossly distorted. It causes tenants to live in constant fear of eviction and ensures that the unhoused sleep on the streets. The subordination of housing needs to profit has created a dangerous bubble that threatens an economic catastrophe.
A new report by RBC earlier this month shows Canadians experiencing debt between the ages of 35 to 44 had total debt-to-disposable income in 2019 — up from 150% in 1999. Of course, this age group, the millennials, are amongst those who are most likely to be prospective first-time homebuyers.
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Apr 2, 2023 · Canada’s housing prices dropped 15.8% year over year in February 2023, raising concerns that Canada’s real estate bubble could pop anytime. The house price has to drop another 20-25% to reach...
