Most of my focus on the bubbly Canadian real estate market has been on Western Canada. This is primarily because over the last 10 years, Eastern Canada, i.e. everything east of Manitoba, has not much mattered in the global scheme of things as global investor demand has been focused on Western Canada, where things can be dug/mined/drilled etc. out of the ground. It is out west where the bubbly activity in the housing market has occurred.
Worthwhile Canadian Initiative – one of my favourite economics blogs – cites data from Teranet to bolster their argument that Canadian home prices are not in a bubble. It is an index akin to the Case-Shiller index in the US that tracks the changes in home prices in six Canadian cities – Vancouver, Calgary, Toronto, Ottawa, Montreal and Halifax. According to the Teranet index, home prices rose 8.9% per year from 2003 through 2007 across the six cities in the index.
That may be fast, but it is not a bubble. So props to the economists. There has been no bubble in all of Canada.
Read the full article “Canadian Real Estate Not a Bubble” in Seeking Alpha (August 17, 2009).