As the U.S. begins to recover from its housing bubble, concerns have been escalating about a housing bubble in Canada.
“Canada is carving out a top, while the United States is seemingly carving out a bottom,” writes Gluskin Sheff economist David Rosenberg.
Using three charts, Rosenberg points out the stark differences in the Canadian and U.S. housing market and the existence of a possible Canadian housing bubble.
Chart 1. The ratio of Canadian housing starts to U.S. starts is now 0.3x:
Chart 2. Canadian home prices are on average twice the level of home prices in the U.S.:
Charts 3 & 4. Vancouver & Toronto home prices relative to U.S. home prices:
- from ‘Canadian housing prices are not sustainable: David Rosenberg’, Financial Post, 11 Jul 2012 [hat-tip pennysaver]
Spend some time with these charts and you’ll see why our own call for Vancouver prices to fall 50%-66%, peak to trough, is fairly pedestrian.
By the way, we suspect that US home prices haven’t yet bottomed, and have about another 20% to go.