Canada’s Most Splendid Housing Bubbles v. its Other Markets, September Update

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Wolf Richter,

Vancouver house price bubble deflates 14th month in a row. Toronto matches 2017 peak. Calgary, Edmonton beaten up by oil bust. Quebec City flat for 6 years. Montreal, Ottawa hit new highs.

House prices in Greater Vancouver – in its glory days not too long ago, one of the world’s hottest housing bubbles – dropped another 0.5% in September compared to August, the 14th month-to-month decline in a row, and were down 7.4% from the peak last July, according to the Teranet-National Bank National House Price Index. House prices had more than quadrupled over the 16-year boom from January 2002 through July 2018. The index is now back where it had first been in August 2017:


In the Greater Toronto Area, house prices had more than tripled (+218%) since 2002 – compared to Vancouver’s quadrupling over the period. In September, house prices were essentially flat compared to August, were up 3.9% from September last year, and matched the prior peak of July 2017:

Toronto’s chart above and the charts of all other markets below are on the same scale as Vancouver’s chart to show the house price increase in each metro in proportion to the increases in the other metros, and particularly in proportion to Vancouver.

Each of the markets has a unique profile, and no market can match the 17-year craziness of Vancouver, but some markets had short and stunning increase somewhere in between. And some markets are below where they’d been years ago. As we go down the list, to markets with smaller and smaller house price increases since 2002, the white space on each chart gets larger and larger.

The Teranet-National Bank House Price Index tracks prices of single-family houses via “sales pairs,” where the price of a house that sold in the current month is compared to the price of the same house when it sold previously, often years ago (methodology). This eliminates the issues of “mix” that skew median-price indices and the issues of “big outliers” that the skew average-price indices.


House prices in Victoria, which also more than tripled since January 2002 (+224%) were essentially flat in September compared to August and July, but at record level, and were flat year-over-year, despite a dimple last winter (chart is on the same scale as Vancouver’s):


In the Winnipeg metro, house prices rose 0.6% in September from August and eked out a new record, having surpassed the prior record, set 12 months ago, by 0.5%. Note how the index had nearly tripled between 2002 and September 2014, but has since flattened out:

Quebec City:

House prices in the Quebec City metro fell 0.7% in September from August, were down 1.1% from the peak in July, were flat year-over-year, and were essentially flat since June 2013, after a ludicrous gain of 160% in the prior 12 years:


The House Price Index for Montreal rose 1.0% in September from August to a new record and was up 6.3% from September last year. The index has risen 170% since 2002 with only some seasonal fluctuations, and without getting tripped up during the Financial Crisis:

Oil Boom-and-Bust:

House prices in Calgary and Edmonton are a function of oil booms and busts. Now is the bust. But during oil booms, veritable miracles happen whose hangovers are painful and last many years. In the two-year period during the oil boom before the Financial Crisis, the index for Calgary skyrocketed 78% and for Edmonton 87%. Then, inevitably came the oil bust.

In Calgary, house prices rose 0.2% in September from August to where they’d been in March 2014 level, but remain down 1.9% from September last year, and down 5.7% from the peak in October 2014:

In Edmonton, house prices were unchanged in September compared to August and July and were down 3.1% year-over-year and down 5.9% from the mind-blowing peak in October 2007:


House prices in Ottawa rose 0.8% in September from August to a new record, and are up 7.1% from September 2018. Since January 2002, the House Price Index has risen 120%, which is a significant increase by any measure, but compared to the other housing markets in Canada, particularly the enormous bubbles in Vancouver and Toronto, Ottawa ranks in last place on this scale in terms of price gains since 2002:

A measure of house price inflation

The Teranet-National Bank National House Price Index tracks how many more Canadian dollars are required to buy the same house over time – the sales pair method. When the prices of the same houses double over the years, it’s not because the houses got twice as big, but because the purchasing power the Canadian dollar has declined, and now it takes twice as many dollars to buy the same house.  This “sales pair” method makes the index, and similar indices, such as CoreLogic Case-Shiller Home Price Index for the US, a measure of house price inflation, which varies from market to market.

In the nine-county San Francisco Bay Area, house prices dropped 5.4% in September compared to a year ago and are down 16.2% from the peak in May 2018. Ironically, house prices dropped the most in Silicon Valley. Read...  Housing Bubble in Silicon Valley & San Francisco Bay Area Turns to Bust Despite Low Mortgage Rates & Startup Millionaires


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