Canada’s hottest housing bubbles, November update: sharpest 5-month plunge on record

Down faster during bust than up during bubble: Special feature in some cities. Obscene humor revolves around the charts.

By wolf richter For wolf street,

The overall 11-city Terranet-National Bank house price index fell 0.8% in September to October, and is down 7.7% from the peak in May, the biggest five-month decline in the history of the data going back to 1997. The year-to-date gain narrowed to 4.9% from a 19% range in March and April.

Nine of the 11 cities in the index had month-over-month declines in October, with Halifax declining by 5.7%. In Hamilton, prices have declined 15.9% from the peak in May after an absurd increase, and are now nearly flat year-on-year. Only two cities in the index posted month-over-month gains: the oil cities of Calgary and Edmonton, whose housing markets had been dormant for 15 years.

hamiltonWhere prices move parallel to Toronto, surpassing Toronto and Vancouver in 2021 to become the #1 All-Time Most Splendid Housing Bubble in Canada, as measured by the Terranet-National Bank House Price Index.

And it is now #1 in percentage decline from peak. in October: -2.9% for the month, -15.9% from the peak in May; About flat year-over-year.

Going Down Faster Than Up: The index fell faster in the first five months of the bust (-69 points) than in the last five months of the bubble (+65 points).

There’s a vague sense of humor surrounding this kind of absurd price hike that unfolds later. These things make you think about the workings of the human brain:

Halifax In terms of fall from the top is #2. In October: -5.7% for the month; -14.0% from the peak in June, which reduced year-to-date gains to +6.7%, down from more than 35% in early 2022.

Here too, the index declined faster (-41 points) in the first four months of the bust than it rose during the last four months of the bubble (+31 points).

This chart proves once and for all that central bank interest rate suppression and QE – the entire free-money era – spawned a virus that turned human brains into flesh, an event that i saw first with my imploded stocks, And then, when the central banks end the free-money era, the brain starts to recover, and see what happens.

Greater Toronto Area #3 in terms of fall from the top. In October: -0.9% for the month, -11.9% from peak in May, reducing year-to-date gains to 3.6%.

The index fell at roughly the same pace in the first five months of the bust than it rose in the last five months of the bubble:

Victoria #4 in terms of fall from the top. In October: -1.2% for the month; -10.4% from the peak in May, which reduced the year-to-date gain to 2.1%.

The index fell faster in the first five months of the bust (-32 points) than in the last five months of the bubble (+24%).

Canadian house prices reacted faster to rising interest rates than US house prices – although they are still reacting – largely because in Canada, most mortgages are either variable with some type of railing. -rate or two years or fixed-rate for two years. five years. So when interest rates started rising, current Homeowners faced the prospect of higher mortgage payments in the future. This is in addition to potential home buyers who are seeing mortgage payments at rates and prices that they cannot afford.

The methodology of the Terranet-National Bank House Price Index is based on “repeat sales” that track the price of each home sold over time. Unlike average prices, the “repeat sales” method is not affected by changes in the mix of homes sold. The index was set at 100 for all cities in June 2005. All my charts here are on the same scale.

Ottawa #5 in terms of fall from the top. In October: -1.8% for the month; -9.6% from the peak in June, which reduces the year-to-date gain to 2.8%. The index is now below where it was in July 2021 for the first time.

greater vancouver #6 in terms of fall from the top. In October: -0.1% for the month; -7.9% from the peak in April, which reduced the year-to-date gain to 3.7%.

winnipeg #7 in terms of fall from the top. In October: -3.1% for the month; -7.5% from the peak in June, which reduced the year-to-date gain to 3.9%.

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

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

Quebec City, in October: -1.2% for the month; -3.6% from the peak in July, which reduced the year-to-date gain to 8.6%:

Oil towns are still the exception.

in calgary, Canada’s oil capital, in October: +2.0% for a new record month; +16.2% year-over-year. Prices were roughly flat from mid-2007 to mid-2020:

in edmonton, Also in Canada’s oil patch, in October: +2.1% for the month to a new record; +7.5% year-on-year. The index is now only a hair above where it was in mid-2007:

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