Canada’s housing market is likely in bubble territory, following months of surging prices across some of the hottest real estate regions in the country.
According to Rosenberg Research & Associates founder David Rosenberg, Canada’s housing market is in a “huge bubble,” following a surge in home prices that are now leaving many potential homeowners priced out of the market. The Toronto region saw home prices top $1 million for the first time ever in February, while some suburbs saw record price increases of up to 20%. Likewise, homes in the Vancouver area saw detached homes sell for an average of $3.3 million in just the first two months of 2021.
“This might be one of the biggest bubbles of all time,” Rosenberg, who held a bearish stance on the US housing market prior to its crash in 2008, said in a Bloomberg Television interview. According to him, a significant divide exists between the pandemic-damaged labour market and surging real estate, which in turn is creating an extensive bubble situation. “We have a situation where home prices are up 18% year-over-year with practically no wage growth,” he explained.
Sponsored · Selkirk Copper Mines
Canada was not subject to the same housing collapse that plagued the US in 2007 and 2008— a collapse that Rosenberg successfully predicted during his time at Merrill Lynch. This time however, according to the Bank of Montreal, Canadian home prices are approximately 40% higher compared to the US. In fact, the ongoing housing boom even caught the Bank of Canada’s attention, which noted that activity “has been much stronger than expected.”
Information for this briefing was found via Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
