Canada’s Real Estate Bubble Has Grown Over 800% Faster Than US Home Prices

Canada’s Real Estate Bubble Has Grown Over 800% Faster Than US Home PricesShow more

Canadian real estate prices are some of the fastest growing in the world, and have been for some time. The US Federal Reserve (the Fed) updated its real home price index for Q3 2021. All G7 countries are seeing home price growth, but nowhere is quite like Canada. In Canada, real estate prices have grown almost double the rate of the US over the past year. Since 2005, home prices have grown over 900% faster than American prices. Nothing else in the G7 even comes close to Canada. It must be some sort of remote, tax-free island with no land.

Canadian Real Estate Prices Have Grown Over 21%
Canadian real estate prices have shown an obscene amount of growth over the past year. Real home prices rose 0.8% in Q3 2021 and are now 21.4% higher than the same quarter a year before. This is just under CREA’s estimate, but a little higher than the Teranet estimate. In any case, the growth dwarfs that of other G7 advanced economies.

Canadian Real Estate Prices Grew Nearly 2x The Next G7 Country
Other advanced economies are seeing crisis-inducing price growth, but nothing like Canada’s growth. The 21.4% annual growth seen in Canada is nearly double the 11.6% observed in the US over the same period. Germany is dealing with an affordability crisis so extreme, they’re discussing nationalizing landlords. How much did prices need to rise in the past year to trigger that kind of radical take? Germany’s annual home price growth is up a whopping, uh, 6.3% — under a third of Canada’s gains.

G7 Real Annual Home Price Growth
The inflation-adjusted annual price increase for home prices in G7 countries in Q3 2021.

Canadian Home Prices Have Grown 800% Faster Than The US
Few in Canada think its real estate prices are a significant cause for concern. That appears to result from the numbing of seeing it happen for an extreme amount of time. As of Q3 2021, Canadian home prices have increased 140% since 2005. This is 819% faster than the 15.3% real growth the US has seen. The next closest country to Canada in the G7 is Germany at 49.3%, nearly one-third of the increase. This kind of growth is best appreciated as a graph.

Canadian real estate prices are showing some of the most exuberant price growth in the world. It’s done this for some time, and hasn’t managed to trigger any warnings. Well, it has, technically. Several of them, for over a decade. Still, Canada doubled down on its easy credit strategy. It’s even trimming its GDP forecast to facilitate low rates and higher home prices.