TheKingEast
Senior Member
Home prices going up. Agents are licking their chops.
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I think the percentage is an over exaggeration but plenty to be worried about.
it's best to read the article since many charts attached with it that I can't post here.
In Toronto, I believe we are 35-40% over inflated
Deutsche Bank reveals 7 reasons why ‘Canada is in serious trouble,’ starting with a 63% overvalued housing market
http://business.financialpost.com/2...starting-with-a-63-overvalued-housing-market/
Andy Kiersz, Business Insider | January 8, 2015 12:33 PM ET
Deutsche Bank’s chief international economist Torsten Sløk has circulated a chart deck looking at global housing markets, and Canada stands out as having quite a few problems.
According to the report, homes in Canada are 63 per cent overvalued, greater than the 50 per cent levels in Australia and Norway, Deutsche Bank AG said in a report Thursday.
Values in Canada are 35 per cent higher when the median house price is compared to the median household income than the historical average and 91 per cent higher compared with average rentals.
Sløk dedicated seven charts to the country.
Simply put, debt levels are very high, and with sky-high home prices cooling off, we could see pressure on the Canadian financial system and the labor markets.
While US households have been deleveraging since the Great Recession, Canadian household debt as a percent of household income is higher than ever:
Canada Household Debt To IncomeTorsten Slok/Deutsche Bank
The mortgage credit market has been slowing down, which is a bad sign for the housing market:
Canada Mortgage Debt GrowthTorsten Slok/Deutsche Bank
Other forms of debt have also been exploding, while income has grown at a much slower rate:
Screen Shot 2015 01 08 at 10.14.45 AMTorsten Slok/Deutsche Bank
Construction of houses has been level over the last decade, while multifamily units like apartments have reached record highs:
Canada multifamily vs detached housingTorsten Slok/Deutsche Bank
Canada’s biggest housing market, Toronto, has been slowing down over the last couple years:
Canada Toronto housing startsTorsten Slok/Deutsche Bank
Meanwhile, Canada’s West Coast metropolis of Vancouver has held steady:
Canada Vancouver Housing StartsTorsten Slok/Deutsche Bank
Any difficulty in the Canadian housing market could bleed over into the larger economy, since construction is a much larger part of Canadian employment than US employment:
Canada vs US housing construction jobsTorsten Slok/Deutsche Bank
YAWN... 63 Percent ? Who are these people? I totally agree of pockets being overvalued by 30-35% at most but not the entire city as a whole. I think our city works 10x harder then most cities down south. Household Debt on the other hand..
YAWN... 63 Percent ? Who are these people? I totally agree of pockets being overvalued by 30-35% at most but not the entire city as a whole. I think our city works 10x harder then most cities down south. Household Debt on the other hand..
What does this mean?
Since every article likes comparing Canada to the USA. My impression of the USA while visiting is that there much more laid back if not lazy. We work hard for what we want. Every immigrant still wants that dream of pride of home ownership. We didn't have it given to us like candy compared to the south. People in general are very happy in Canada minus the winter months and people seem to be staying to raise a family. The demand is here to stay.
GREATER TORONTO REALTORS® REPORT Q4 RENTAL MARKET FIGURES
TORONTO, January 16, 2015 - Toronto Real Estate Board President Paul Etherington
announced that fourth quarter 2014 condominium apartment rental transactions though
the TorontoMLS system were up by 17 per cent to 5,036 compared to the fourth quarter
of 2013. Over the same period, the number of condominium apartments listed on
TorontoMLS was also up, but by a lesser annual rate.
“We have seen record condominium apartment completions over the last two years.
Many of these new apartments are owned by investors who have chosen to rent them
out. The increased supply of rental condos has been met by increased demand for
these units, as renter households turn to the condominium apartment segment to find
modern units in popular neighbourhoods,” said Mr. Etherington.
“Increased rental demand has resulted from steady population growth in the Greater
Toronto Area, as newcomers have been attracted to the region by its economic and
ethno-cultural diversity,” continued Etherington.
Average rents for popular one-bedroom and two-bedroom apartments were basically
flat in the fourth quarter when compared to the same period in 2013. The average onebedroom
rent was up by $10 year-over-year to $1609. Over the same period, the
average two-bedroom rent remained the same.
“Average rents can be influenced by both changes in market conditions and changes in
the type and geography of apartments rented from one period to the next. Over the
next few months, if we continue to see the growth in rental transactions outstrip the
growth in units listed for rent, we will likely see a new upward trend in average rents,”
said Jason Mercer, TREB’s Director of Market Analysis.
This is a very analytical approach to valuating real estate in Canada...
I wonder why condo rents are flat if there is so much demand. Actually, they're not even flat but decreasing when you consider inflation. The tidal wave of condo completions has hardly started.