John Sneisen and Financial Advisor Tim Picciott talk about the real estate bubble popping in Vancouver and how the Vancouver housing market has hit 30-year record lows by far in house sales for April being at 130. The average condo prices in Vancouver are year over a year down 19%. With a lack of new borrowers and an entry price into owning real estate at $120k in personal income needed it is clear that the Vancouver housing bubble has hit its peak and is declining. The Detached home prices are down over 10.5% in Metro Vancouver area as of March 2018.
They also touch upon how the head of Canada Morgage and Housing Corporation said in an interview with Bloomberg BNN that Canadians need to stop glorifying homeownership as a savings vehicle. The new CMHCtries to boost homeownership by offering qualified first-time home buyers a 10 percent shared equity mortgage for a newly constructed home or a 5 percent shared equity mortgage for an existing home. It is a bandaid to try to stop housing from collapsing after the mass printing of currency by setting interest rates low.
They report on how the Monetary supply M1 and M3 in Canada have been increasing at one of the fastest rates in the world since 1995 about 500% and since 2007 250%. Most of this currency has floated into real estate and the TSX. It has created a debt bubble in private debt at one of the highest levels in the world with almost 270% private debt to the GDP. Delinquency rates are up all across Canada and not to mention Toronto that has a very similar real estate bubble as Vancouver.
They ask how can this be sustainable and will Canada be the first major Western Economy to drop their interest rates to scare off the inevitable debt bubble created in Canada. With Oil down and debt up will Bank of Canada put forward big stimulus programs to try to save the economy from the bubble it has created? Only time will tell, but we are getting close to the end game.