“I’m surprised that everyone else is so surprised to hear anyone talk about a housing bubble” – “Canadian RE 2021 worse than U.S. bubble at 2006 peak” – David Rosenburg

“I’m surprised that everyone else is so surprised to hear anyone talk about a housing bubble…”

“Housing prices went up 17% in a year where underlying wage growth is stagnant…”

“I called the bubble in the US in 2005-2006… I was looking at price to rent ratios, I was looking at price to rent ratios… household exposure to RE… I’ve got news for you… the numbers in Canada now are worse than they were in the US 13 years ago”

[asked about colleagues who say there is a “bubble in calling bubbles in Canadian RE”] “Bubbles can go further than you think, but they don’t correct by going sideways…”

“I listen to… Stephen Poloz [BOC governor]… it’s like listening to Ben Bernanke in 2006 when he told everybody “Oh, don’t worry… house prices nationwide never go down“..

“Bubbles can last a long time, but we’re in a very unstable situation”.

excerpts from economist David Rosenberg’s Bloomberg interview, 24 March 2021

6 responses to ““I’m surprised that everyone else is so surprised to hear anyone talk about a housing bubble” – “Canadian RE 2021 worse than U.S. bubble at 2006 peak” – David Rosenburg

  1. Seeking Knowledge

    Always wanted to be the first to leave a post to hopefully start a discussion 🙂 I’m dumbfounded at the Van RE market. Just when you think fundamentals will finally kick it…nope! I guess when people want something bad enough, they’ll find a way to get it (FOMO?) I’m more of a bear but I didn’t sell in the past decade, nor have I bought. I am a little envious of some of my bull friends who has made truck loads of money in RE but since I didn’t take the risk, I don’t deserve the reward.
    Interesting to see what happens in the next few years…but that’s what I said in 2009 and look what happened.

  2. West Coast Happy

    I have been reading VREAA for a year or so and I am surprised that some are still calling it a bubble and referring to detachment of housing prices from local economy (a.k.a fundamentals). It is not a bubble and local economy has little to do with RE prices in Greater Vancouver. The fundamentals are now global and this will not change any time soon. Buy what and where you can afford, and definitely before the immigration and travel gates open again. Interest rates are not rising and prices are not dropping for the next few years.

  3. West Coast Happy

    Well, I think it will depend on how much the rates rise over what period of time… Per the example in the article, if the rate increase is from 1.39 to 1.54 the mortgage payment increases by just over $400 per year (on a 530,000 mortgage). It is not that hard to manage that. Even with rising interest rates many potential buyers have already locked a low rate or can still lock it at around 2% and will benefit from these rates for the next 5 years. After that, either continue enjoying low rates for if they can’t manage a significantly higher rate, they will sell and still be ahead. With the rate increase creeping up just a couple of points a quarter or so, I do not see the house prices falling. The prices will stabilize (hopefully) and RE will appreciate by 2-5% a year. Those who buy now at ‘reasonable’ market prices will be ahead in 5 years.

  4. Credit will now tighten. As liquidity goes, so goes the market.

    https://www.greaterfool.ca/2021/04/09/is-that-it/

  5. West Coast Happy

    @ Keith
    This is just a slightly tighter stress test. It may cause some buyers to drop out of the race or adjust their goals but I do not see how it’s gonna affect RE prices in the long run. Besides, the new rules will not get into effect until June 1. With such an advanced warning, just watch what will happen between now and June. Even if the prices stabilize or drop a bit in the summer (5% max, based on the past trends), I think it will be temporary. Buyers will eventually recover and adjust, again, based on what we have seen in the past.

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