Canada’s Greatest Real Estate Bubbles November Update: Fastest Drop on Record in Five Months

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Down faster during drop than up during bubble: Special feature in some cities. Vague humor floats around the charts.

By Wolf Richter for WOLF STREET.

The Teranet-National Bank 11-city general home price index fell 0.8% in October from September and 7.7% less than its peak in May, the biggest five-month drop in data history dating back to 1997. the year-on-year gain to 4.9%, up from the 19% range in March and April.

Nine of the 11 cities in the index had month-over-month declines in October, surpassed by a 5.7% drop in Halifax. In Hamilton, prices have plunged 15.9% from the May high after a ridiculous spike, and are now holding steady year-over-year. Only two cities in the index had month-over-month gains: the oil cities of Calgary and Edmonton, whose housing markets had been dormant for 15 years.

hamiltonwhere prices tend to move in parallel with Toronto, had become the most splendid real estate bubble of all time in Canada after surpassing Toronto and Vancouver in 2021, as measured by the Teranet-House Price Index. National Bank.

And now it’s number 1 in terms of percent drop from peak. In October: -2.9% for the month, -15.9% from the May peak; on plan year after year.

Falling faster than rising: The index fell faster during the first five months of the crash (-69 points) than it had risen during the last five months of the bubble (+65 points).

Lazy humor floats around these kinds of ridiculous price spikes that then wind down. These things make you wonder about how the human brain works:

halifax it is #2 in terms of the drop from the peak. In October: -5.7% in the month; -14.0% from the June peak, which cut the year-on-year gain to +6.7%, up from more than 35% in early 2022.

Here too, the index fell faster in the first four months of the burst (-41 points) than it had risen during the last four months of the bubble (+31 points).

This chart proves once and for all that the central bank’s interest rate crackdown and QE (the whole era of free money) spawned a virus that turned the human brain to mush, a phenomenon I previously observed with my Imploded Stocks . And then when the central banks end the era of free money, the brain starts to heal and see what happens.

The Greater Toronto Area it is #3 in terms of the drop from the peak. In October: -0.9% on the month, -11.9% from the May high, bringing the year-over-year gain to 3.6%.

The index fell at about the same rate during the first five months of the burst that it jumped during the last five months of the bubble:

Victory it is #4 in terms of the drop from the peak. In October: -1.2% in the month; -10.4% from the peak in May, which cut the year-on-year gain to 2.1%.

The index fell faster during the first five months of the burst (-32 points) than it had risen during the last five months of the bubble (+24%):

Canadian home prices reacted faster to rising interest rates than U.S. home prices, although they are now reacting as well, largely because most mortgages in Canada are low-rate mortgages. variable with all kinds of protections or fixed rate for terms such as two years or more. five years. So when interest rates started to rise, existing homeowners began to face the prospect of higher mortgage payments in the future. This is in addition to potential homebuyers seeking mortgage payments at these rates and prices that they cannot afford.

The Teranet-Banco Nacional Housing Price Index methodology is based on “repeat sales” that track the price of the same home each time it is sold over time. Unlike median prices, the “repeat sales” method is not affected by a change in the mix of homes sold. The index was set at 100 in June 2005 for all cities. My graphs here are all on the same scale.

Ottawa it is #5 in terms of the drop from the peak. In October: -1.8% in the month; -9.6% from the June peak, which cut the year-over-year gain to 2.8%. The index is now below where it had first been in July 2021.

great vancouver it is #6 in terms of the drop from the peak. In October: -0.1% in the month; -7.9% from April’s peak, which cut the year-over-year gain to 3.7%.

winnipeg it is #7 in terms of the drop from the peak. In October: -3.1% in the month; -7.5% from the June peak, which cut the year-on-year gain to 3.9%.

Down faster than up: The index fell faster during the first four months of the crash (-21 points) than it had risen during the last four months of the bubble (+19 points).

Montreal, in October: -1.5% in the month; -6.4% from the June peak, which cut the year-over-year gain to 8.4%:

quebec city, in October: -1.2% in the month; -3.6% from the July peak, which cut the year-over-year gain to 8.6%:

The Oil Cities continue to be the exception.

in Calgary, Canada’s oil capital, in October: +2.0% in the month to a new record; +16.2% year-on-year. Prices were practically stable from mid-2007 to mid-2020:

in edmonton, also in the Canadian oil zone, in October: +2.1% in the month to a new record; +7.5% year-on-year. The index is now just a hair above where it was in mid-2007:

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