International Comparison of Mortgages & Canadian bubble predictions
I scanned through this report: http://www.housingamerica.org/RIHA/R...Lea_Report.pdf
and thought it was very interesting and share worthy. This leads me to lean towards the no-bubble/small-bubble party.
What were your take aways and did it change your view on the Canadian "bubble" predictions?
Admittedly, I just flipped through the charts - but for me they would lead me to believe that we are in a housing bubble...
1. Our home ownership rates are up there with Australia, Ireland, Spain, the US and UK.... most of those countries have had housing corrections or crashes recently
2. We're one of the few countries that has had many consecutive years of positive housing prices increases, without a significant correction
3. Canadian mortgages have a high degree of interest rate risk in the short to medium term
Perhaps I'm just picking out the supporting data, but it looks to me like Canadians have bought a ton of houses in the past 10 years - more than they ever have in history, and more than any country in the world that hasn't ... and that was largely due to easy credit. Either circumstances will change that will force this activity to stop (tightening credit, increased interest rates) and/or sentiment will change and owning a home will no longer be considered an essential part of adult life (people will take out calculators and realize that renting can be cheaper). Either way, the only direction I see the housing market go is downward.
Published 2010, data used is up until 2009, when housing went down overall in Canada. Article is irrelevant to today's market.
By every single metric I'm aware of housing in Toronto & Vancouver & most major cities is well overvalued.
Cap rates, price to income, return on equity, return on investment and probably a few more I can't think of right now...
A simple look at the chart of housing price increases over the last 20 years clearly shows a bubble forming. Spikes like that just are not sustainable.
Certainly from an investment standpoint it's just not even making sense. Not at all.
And then there's the anecdotal, look at all the crazy "I'm gonna be a landlord schemes" we've seen on CMF lately. Seriously who really wants to be a landlord? None of these people do they just want to control more real estate.
It has been posted before............but the Vancouver real estate market as a roller coaster ride is worth another view.
It shows how short our memories are, and what can happen in a hurry.