Here are some good statistical facts about the first Quarter of Canadian Real Estate:
1. Single Family Dwelling Status:
2. Who is leading the pack in the Canadian Condo Boom
3. Are Canadians still taking advantage of the Great Interest Rates?
4. How indebted are Canadians compared to other countries? Not very.
5. What is another difference between US and Canadian fundamentals?
6. We are less Indebted in 2012 than we were in 1990's.
7. Investment money from Asia is Cash - and Cash is good.
8. HK buyers blame mainlanders while mainlanders blame HK.
9. How overvalued is HK versus Vancouver?
In Metro Van, SFD is the perched Pollyanna; protected, still spunky but gee, why is the tree shaking? On the quarterly basis, single-family detached shows a slight gain, less than one percent with the y-o-y less than five percent; which is okay but nothing like the double-digit gains of the recent past.
Quebec is leading new developments in Canada: Meanwhile, the Canuck condo-building boom ramps up, as does fears of oversupply in certain markets. Nationally, ‘multiple’ urban starts rose by 27 percent in April 2012, to 158,500 starts on a seasonally adjusted basis. Quebec leads the pack, with starts up 57 percent. Previous front-runner Ontario was up 11 percent and what Bloomberg News reports as a 50-percent annualized jump in multiple-unit housing starts. Physically, Toronto got most of the action, gaining 11,000 units, Western Canada, up 6.3 percent.
Most Canadians are still taking advantage of great interest rates: Cheap money encourages consumers to assume more debt and Finance Minister Jim Flaherty regularly admonishes Canadians’ love of cheap credit; household debt to annual disposable income is now 153 percent, more than double the load of the late 1980s and dangerously high, says Ottawa.
Other countries in Europe are WAY more indebted than Canadians though: National Post business writer Andrew Coyne wryly notes that, yes, 153 percent is high but far below “the spendthrift Swedes” (200 percent), “the feckless Dutch” (260 percent) “to the profligate Danes” (360 percent) and those citizenries are managing nicely, for now.
Canadian markets are VERY differed from the US situation: Canadians’ debt load nears the Americans level just prior the US housing crash but Coyne argues that Canada isn’t strewn with the same landmines: sub-prime mortgages, small, vulnerable regional banks and so on.
We are LESS indebted than we were in the 90s: Although Canuck debt has grown, so have personal assets, now about five times larger than the debt load. Nationally, mortgage costs, interest and principal combined, are “barely half of what they were in the early 1990s” or about 30 percent of disposable income. (But that’s averaged nationally; in hothouse markets such as the Metro Vancouver and Toronto, the percentage is far, far higher.
Cash is King: In Metro Vancouver and to a lesser extent, the Capital Regional District, higher-end detached and condo-investment categories have long been buoyed by money from aboard, some would say ‘hot money’ targeting homes/investments (See Sidebar: Hot and Cold Running CMHC Condos). But investment money is cold cash; if the gains aren’t there, it tends to either hold back or pull out.
What is a great NIMBY argument, that HK buyers blame mainlanders while mainlanders blame HK: The Economist global in-house price index covers 21 global economies. The most recent peek put the HK property scene at 58 percent over ‘fair value’, second only to Singapore in the ‘most overvalued’ category. (In the 2011 index, Canada was 21 percent overvalued; the index doesn’t break out Metro Vancouver.)
How overvalued is HK versus Vancouver: By the way, grumbling Metro Vancouverites, The Economist notes that “people in Hong Kong often blame buyers from mainland China for pushing up prices. Ironically, mainlanders often blame buyers from Hong Kong for their [the mainland] own property frenzy.
References:
The Landcor Report: http://landcor.com/market/reports/Q1_12_Residential_Sales_Summary.pdf
For more information on any of the news in this article, please contact TeamYVR in Vancouver, below.
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