Most ‘overvalued’ housing markets

The Economist magazine has named the Canadian housing market among the most overvalued in the world. (Even though they love our cities)

Measured using price-to-rent and price-to-income ratios, the Economist says housing markets are at least 25 per cent overvalued in nine of the 23 economies it tracked.

When comparing the relationship between the costs of buying and renting, it cited Canada, Hong Kong and New Zealand as “the most glaring examples” of overheated markets.

“The overshoot in these economies and others bears an unhappy resemblance to the situation that prevailed in America at the height of its boom, just before the financial crisis,” the magazine states.

Read the full article here.

Hat-tip to kabloona for the link.

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Mister Obvious
Mister Obvious
6 years ago

space889 @ 58

UBC Commerce, Science, and Medical school are very competitive to get in.
——————–

I agree. It’s far better to avoid that overcrowded arena and instead pursue a technical degree in something society demands now and well into the future. Real hands-on, physical nuts and bolts stuff. Be the person the helpless academics call when their support systems break and they don’t know one end of an oscilloscope from another.

Then, (this part is important) study finance in your spare time and learn how to invest properly as opposed to gambling, say for example, in overpriced housing or risky social media and tech stocks.

If you’re young, smart, energetic, patient and willing to be of service to somebody you can become successful slowly and build wealth in a positive, steady way. It worked for me.

Bob the builder
Bob the builder
6 years ago

…I was told by a government official that the reason why all the …..

Really? Was your Government official friends with Gandalf, Luke Skywaker, and the Teletubbies by any chance? Does your stuffie need a hug?

Boombust
Boombust
6 years ago

Our schools are pathetic?

Only the morons in Victoria who are running things.

Bob the builder
Bob the builder
6 years ago

….I am so convinced that prices are going to skyrocket that I am buying two more building lots in Surrey….

LOL. Hmm, are building lots expensive in fantasy land? Will you build a Lego house on your fantasy lot? Or will the teacher’s strike be over by then and you’ll be back for your final year in elementary school?

space889
space889
6 years ago

UBC Commerce, Science, and Medical school are very competitive to get in. 86% average is no guarantee and I think Commerce has some minimum English requirements as well. So spoiled brats who can’t get the high grades aren’t going to get into UBC.

Also, private schools in BC extend beyond just St. George, Little Flowers, and Crofton House. Almost all the rich mainlanders family I know with elementary school kids are either putting their kids in private school or plan to after 1 or 2 years in public school and see how pathetic it is compared to Asia.

The ones going to public school are usually highschool age children where the only worry is English as Math, Chem, Phys 12 here are basically grade 9/10 stuff in Asia.

cris
cris
6 years ago

??

see what happened to 18% interest rate in the 80’s

But I could see the world returned to inhabit only 2 types of people:

1. Land Owners
2. Slaves

Many Franks
6 years ago

Equifax has another Canadian debt analysis out. See e.g.:
Canadians taking on more debt, but delinquency rate drops, report finds

Some snippets:

Data compiled for the second quarter shows that overall consumer debt, which includes mortgages, grew 7.2 per cent to $1.45 trillion from $1.35 trillion a year ago.

Equifax says instalment loans — or scheduled payments — increased 10.8 per cent while mortgages grew 9.2 per cent. The credit card sector was up 4.4 per cent over the same time last year.

As usual, all commentators are quick to say that everything is fine because delinquencies are low.

I couldn’t find any regional stats.

emmi
emmi
6 years ago

??, once the u.s. treasuries raise their rates then canada, et al, will have to also, which will crush mortgage issuances, which will raise inventory which will crush prices. Or they risk having a failed bond sale if they don’t follow rates up. For whatever reason, there is a lot of money chasing tiny bond returns out there, I don’t pretend to understand why, but just look at their behavior and canada will have to compete for their money.

??
??
6 years ago

Wouldn’t rising interest rates mean money flowing out of non-risky bonds into more risky assets like RE?

emmi
emmi
6 years ago

George, it is not anyone’s guess, it will crash when the U.S. raises interest rates. That will upset the foreign flows of money that are propping up the commodity rich economies of canada and australia.

patriotz
6 years ago

@51: ” So in the meantime, you might as well leverage up and go all in on Vancouver real estate. ”

The only way you can come out ahead doing this is if real prices increase by >3% annually (which they are not doing any more, even for SFH) and interest rates stay at their current levels, until whatever time you sell.

Such a long bet is not a “might as well” to me.

George
George
6 years ago

@Boombust #31 “Do you REALLY believe this market will go on forever?” This bubble will not go on forever, it will eventually crash, but it may not crash for another 1, 5, 10, 20, or 50 years. It’s anyone’s guess when the crash happens. My guess would be, the crash won’t happen for at least another 20 years. During the great financial crisi of 2008/09, everyone thought the Vancouver real estate market would crash. It had a little blip and then kept on marching upwards. That emboldened people to think this market is invincible. Then in 2012 and 2013 public awareness about the Vancouver real estate bubble grew enormously. For the first time, lay people were considering maybe we are in a bubble. The corporate news, typically cheerleaders for real estate, started giving ominous reports that the Vancouver market was… Read more »

southseacompany
southseacompany
6 years ago

“Vancouver home sales pick up in August but still lag previous record-setting levels” Financial Post

http://business.financialpost.com/2014/09/03/vancouver-home-sales-pick-up-in-august-but-still-lag-previous-record-setting-levels/

“The Real Estate Board of Greater Vancouver said 2,771 homes sold through Multiple Listing Service in August, a 10.2% increase from a year ago but a 9.5% decline from July. August sales were 4.3% above the 10-year average for the month.”

“Vancouver results follow some strong numbers in Calgary’s housing market in August which showed homes under $400,000 are becoming increasingly hard to find.”

Oracle
Oracle
6 years ago

Post 41 is Westside impersonating me.

Loser.

Oracle
Oracle
6 years ago

Here is an example of the dumb and brainwashed Candins:

I was told by a government official that the reason why all the climate bs, be good to the environment, global warming, climate change, recycle, take transit, bike, use less energy, blah blah blah was for THE BENEFIT OF TRADE DEALS AND NOT FOR THE GOOD OF THE ENVIRONMENT.

this doctrine was taught at schools, and pushed by gov on a variety of media channels all for the benefit of Corps. –> So they could access overseas markets as those markets would demand a carbon footprint equal to ours in order for deals to work.

Oracle
Oracle
6 years ago

Ulstermann:

You are right.

Even a 40% decline leaves these homes expensive.

The only way to Pop these high prices is to cut Immigration numbers and more importantly to ELIMINATE THE TEMP IMMIGRATION PROGRAMS>>>SUCH AS IMP, etc.

Recessions will only plateau SFD prices.

The general public are too brainwashed and dumb to figure this out.

Ulsterman
6 years ago

Boombust: “Do you REALLY believe this market will go on forever?” No, but the 8 years I’ve been following this “show” now feels like forever and I’ve heard the “THIS time it’s the end” story so many times I’ve lost count. I just wouldn’t want to give any of the younger readers false hope. Just because you’ve been reading stuff here for a couple of years doesn’t mean the end of this bull market is imminent. It has the ability to take a minor breather / plateau and then resume the march upwards. I know this viewpoint may elicit scorn, but really, hasn’t this been the history to date? Of course nothing goes up forever, but what if it continues up or simply plateaus for another 5 years? I live in North Burnaby where old, beater houses start around 900k.… Read more »

mac
mac
6 years ago

And two neighbours are paying that. Soon three. We will be the only ones paying less for this type of unit very soon. The last one on the floor.

mac
mac
6 years ago

They are having no problems finding renters at $2800. As I said, there’s no gap. People move in the same day as others move out. $1850/ 1-bed. No vacancies. Just high turnover. Bit that’s more to do with management. You cross the street and pay $300 less and get 350 less sq ft.

YLTNboomerang
6 years ago

Mac Don’t take offence, I just wanted to know where you got your anecdotal info from and whether you have confirmed that folks are paying this or if it is just what the asking rent is. As for the answer that your neighbours are paying this, we’ll it is my opinion that your neighbours are fools who obviously do not understand the concept of negotiating. Don’t hold yourself to one micro-region such as the Olympic village, pick the general area and negotiate with landlords when you are doing month to month not when you have a date you need a place by. When (not if) you find a better deal, let your landlord know and I can almost guarantee that they will lower the rent $100/month rather than have you leave as one month vacancy is going to take them… Read more »

ham
ham
6 years ago

westside prices stalling is not a surprise. The rest of the market is moving fine. In Richmond homes 600k-1.5mil and moving. Over 1.6mil, MOI is high. With so little listings, I dont expect a big slide unless an economic disaster occurs

Oracle
Oracle
6 years ago

I am so convinced that prices are going to skyrocket that I am buying two more building lots in Surrey.

You bears don’t seem to clue in that the only direction for prices is way way way UP.

Don’t be lovers your entire lives. Get in board before you are forever priced out. HAM $ will never stop flowing, millions more are in their way here, buying up everything in sight with cash earned back home.

Aren’t you tired of losing?

Harry Wang
Harry Wang
6 years ago

Why are more and more B.C. women opting for facial reconstruction surgery? (with video)

http://www.theprovince.com/news/Demand+facial+recountour+surgery+growing+Vancouver+with+video/10168859/story.html

“the popularity of Japanese anime characters with big, expressive eyes and small, heart-shaped faces could also have shaped beauty norms in Asia.”

Multicultural
Multicultural
6 years ago
mac
mac
6 years ago

Space, you’re talking outta your ass. Go to Collingwood and Mulgrave. In fact, go tomorrow. Haw haw. The blog at St George’s puts the blond kid at the front. You are hysterical. I never knew denial could be so funny.