Canada’s Most Lavish Real Estate Bubbles, October Update: Prices Plunging at Fastest Pace on Record

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As Bank of Canada rates and QT mortgage rates rise, some practically funny price spikes are unraveling very fast.

By Wolf Richter for WOLF STREET.

Canada’s real estate market is trying to figure out where the reality is. After the era of ridiculous spikes in house prices, brought on by the Bank of Canada’s interest rate crackdown and QE, the BoC can now deal with raging inflation by raising interest rates and getting rid of bonds. assets (QT), which has been driving up mortgage rates. which makes them indigestible for hyperinflated markets, although not all markets are hyperinflated, as we will see in a moment.

Thus, the Teranet-National Bank 11-City Headline House Price Index slumped 3.1% in September from August, the biggest monthly decline on record, after falling 2.4% in August. since July, which had equaled the highest in history at the time. Lehman bankruptcy fall in December 2008.

In the last four months, the index fell 7.0%, the biggest drop in four months in history. The four months of declines reduced the year-on-year peak from the 19% range in March and April to 6.0% in September.

House prices in Victoria plunged 6.9% in September from August. In Vancouver, prices plunged 3.9% in September, following a 2.0% drop in August. In Hamilton, prices fell 3.3% in September after falling 5.8% in August and are down 13.5% in three months. In Toronto, prices fell 3.0% in September, after falling 4.0% in August, and are down 11.1% in three months. in Ottawa, prices plummeted 3.5% in the month, following a 3.1% drop in August; etc. But in the two oil cities, Calgary and Edmonton, where prices have not moved much in the last 14 years, the index rose to new highs.

hamilton, Ontario, had become the most splendid housing bubble of all time in Canada in January 2021 when it overtook Vancouver, as measured by the Teranet-National Bank House Price Index (the index was set at 100 in June 2005 for all cities). Hamilton had already overtaken Toronto months earlier. These price increases were so extreme that they were hilarious.

But now the hot air is coming out of this splendid housing bubble. In September, prices plunged 3.3% from August, following a 5.8% plunge in August from July. In the last four months, since the ridiculous peak in May, prices have plunged 13.5%, reducing the year-over-year price increase to 5.6%.

In the Greater Toronto Area, after the ridiculous spike peaked in May, home prices fell 3.0% in September from August. Over the four months, the index has plunged 11.1%, reducing the year-on-year gain to 4.5%:

In Greater Vancouver house prices fell 3.9% in the month after falling 2.0% in the previous month. Since the April peak, prices have fallen 7.8%, trimming the year-over-year increase to 3.9%:

in victory, house prices fell 6.9% in September from August and 9.4% less than the peak of May. This reduced the year-over-year gain to 4.7%:

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 data here is not seasonally adjusted.

in Halifax, after its hugely splendid real estate bubble with year-over-year price spikes in the 35% range, prices fell 8.8% from the peak in June, with September almost unchanged from August, after prices crashed 5.3% and 3.6% in July and August, respectively. During those months, year-over-year gains roughly halved, to 16.4%:

in Montréalhouse prices fell 3.3% in September from August and 4.9% from the June peak, reducing the year-over-year gain to 10.8%:

in WinnipegHouse prices fell 3.2% over the month and are down 4.5% from the peak, reducing the year-over-year gain to 5.9%:

in ottawa, house prices fell 3.5% in September after falling 3.1% in August and are down 8.0% from the June high. They are still up 5.0% year over year:

in quebec city, house prices fell 1.4% in September and are down 2.4% from the July high. This left the year-over-year gain at 10.5%.

in CalgaryIn Canada’s oil capital, house prices rose 0.3% to a new high in September, and are up 14.7% year-over-year. Prices were roughly flat from mid-2007 to mid-2020, when the Bank of Canada’s money-printing binge fueled the market. It’s no longer a huge housing bubble, although it was quite splendid in mid-2007:

in Edmonton, Also in Canada’s oil zone, house prices also rose 0.3% to a new high, bringing the year-over-year gain to 5.6%, after 15 years with virtually no increase in house prices. , after the oil bubble until mid-2007:

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