March 23, 2023

Canada’s Greatest Housing Bubbles, October Update: Prices Fall Fastest On Record

With the Bank of Canada rate hikes and QT goose mortgage rates, some practically hilarious price spikes are coming off very quickly.

By Wolf Richter for WOLF STREET.

Canada’s housing market is trying to figure out where the reality is? After the Bank of Canada suppressed interest rates and the ridiculous QE-triggered housing price spikes, the BoC now has to contend with rampant inflation by raising rates and cutting assets (QT), which has driven up mortgage rates. which makes them indigestible in hyperinflated markets, although not all markets are hyperinflated, as we’ll see in a moment.

So the 11-city Teranet-National Bank House Price Index fell 3.1% in September from August, the largest monthly drop on record, after falling 2.4% in August from July, which was then the largest on record. Lehman’s bankruptcy collapsed in December 2008.

Over the past four months, the index fell 7.0%, the largest four-month drop ever. The four-month decline reduced the annual peak from 19 percent in March-April to 6.0 percent in September.

House prices in Victoria fell by 6.9% in September compared to August. In Vancouver, prices fell 3.9% in September after falling 2.0% in August. In Hamilton, prices fell 3.3% in September after a 5.8% drop in August, and in three months prices fell 13.5%. In Toronto, prices fell 3.0% in September after 4.0% in August, and in three months prices fell 11.1%. In Ottawa, prices fell 3.5% for the month after falling 3.1% in August; etc. But in two oil cities, Calgary and Edmonton, where prices had not changed much in the past 14 years, the index hit new highs.

Hamilton, Ontario, had become Canada’s all-time greatest housing bubble as of January 2021 when it surpassed Vancouver as measured by the Teranet-National Bank Home Price Index (the index was set at 100 in June 2005 for all cities). . Hamilton had already passed Toronto months earlier. These price increases were so drastic they were funny.

But now the hot air is coming out of this most amazing housing bubble. In September, prices fell 3.3% compared to August, following a 5.8% drop from July. Over the last four months – after a ridiculous spike in May – prices fell 13.5%, reducing the year-on-year price increase to 5.6%.

Greater Toronto Area, after a ridiculous peak in May, home prices fell 3.0% in September from August. In four months, the index has fallen 11.1%, cutting the year’s gain to 4.5%:

in Greater Vancouver, house prices fell by 3.9% in the month, after falling by 2.0% in the previous month. Since the peak in April, prices have fallen 7.8%, slowing the annual increase to 3.9%:

in VictoriaApartment prices fell by 6.9% in September compared to August and are 9.4% from the peak in May. This slowed annual growth to 4.7 percent:

The Teranet-National Bank House Price Index methodology is based on “repeat sales,” which tracks the price of the same home each time it sells over time. Unlike median prices, the “repeat sales” method is not affected by a change in the mix of homes sold. These data are not seasonally adjusted.

in Halifax, after that huge spectacular housing bubble with annual price spikes of 35%, prices fell 8.8% from the peak in June, and September was unchanged from August after prices had fallen 5.3% and 3.6% in July and August. respectively. In those months, the annual income has halved to around 16.4 percent:

in MontrealHouse prices fell 3.3% in September from August and 4.9% from the peak in June, reducing the annual increase to 10.8%:

in Winnipeghouse prices fell 3.2% on the month and are 4.5% off their peak, cutting the year-to-date gain to 5.9%:

in OttawaHouse prices fell 3.5% in September after a 3.1% drop in August and are 8.0% from the peak in June. They are still 5.0% more than a year earlier:

in Quebec City, house prices fell 1.4% in September and are 2.4% from the peak in July. This left annual growth at 10.5 percent.

in Calgary, Canada’s oil capital, home prices rose 0.3% to a new high in September and are 14.7% higher than a year earlier. Prices had remained roughly unchanged from mid-2007 to mid-2020, when the Bank of Canada’s money printing went to market. There isn’t much of a housing bubble anymore, although it was pretty great until mid-2007:

in Edmonton, Also in Canada’s oil spot, home prices rose 0.3 percent to a new high, bringing the year-over-year gain to 5.6 percent, after virtually no home price gains in 15 years since the oil bubble of mid-2007:

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