festival condos release date.The Canadian version of the subprime crisis. According to the latest data released by the Canadian Mortgage Real Estate Corporation (CMHC), the price of new homes in Canada has risen for the second month in a row, rising sharply from the same period last year, and the average selling price of new homes in Canada is now 52% higher than that in the United States.Please Visit: festival condos release date to Get Your VVIP Registration Today!
Warnings about the risks of the Canadian housing market are getting louder and louder, with many economists saying that the Canadian housing bubble is no less than that of the US subprime crisis, and that such bubbles may be punctured in the future.
The average price of a new house in Canada in April is about C $752000 (US $558000) per household. In Canadian dollar terms, the price rose 11 per cent from a year earlier; in dollar terms, the increase was more moderate, at 2.64 per cent.
The current trend of the US housing market is just the opposite. The average price of a new home in the United States in April was about $368000, according to data released by the U.S. Commerce Department’s Census Bureau (US Census Bureau). In Canadian dollars, it is down 0.49% from a year earlier; in dollar terms, it is down 3% from a year earlier. From this, it can be seen that the average selling price of new homes in Canada is about 52% higher than that in the United States, while in the same period last year, the average selling price of new homes in Canada was 36% higher than that in the United States.
Experts say the degree of differentiation between the Canadian and US real estate markets is intensifying. It is worth noting that the land area of the United States is smaller than that of Canada, and its population is about 10 times that of Canada, so from the point of view of the balance of supply and demand, the average price of sparsely populated Canadian property should be lower than that of the United States. Judging from the state of economic development, the United States, which is in a period of economic recovery, is also better than Canada, which is in an unstable economic situation.
In addition, the recent decline in oil prices has cast a shadow over oil exporter Canada, putting pressure on the Canadian dollar as a commodity currency. The Trump administration in the US has announced that it will impose anti-dumping duties on softwood, a pillar industry in Canada, which accounts for one of Canada’s largest exports, with about 80 per cent of Canadian timber exports to the United States. The market is worried that Canada will become the first target of the US government’s trade crackdown. it can be seen that the overall economic environment in Canada is not optimistic, but house prices have remained “high”, which has intensified the bearish sentiment of investors towards Canada.
In addition to high house prices, the rise in interest rates is also an important variable that can not be ignored by Canadian real estate investors in the future. According to the latest survey by Canada’s Manulife Bank (Manulife Bank), 72% of Canadian house slaves cannot afford a 10% increase in monthly payments. This means that if interest rates rise, it could be the last straw to bring down house slaves. According to Wind, the average monthly payment in Canada is about $1000, an increase of $100, which is beyond the affordability of most Canadian house slaves.
Manulife Bank also surveyed 2098 homeowners aged between 20 and 69 with an annual income of no less than $50, 000. Among them, 14% of the homeowners said that the current monthly payment is already the limit they can afford; 38% of the homeowners surveyed believe that it is no problem to increase the monthly payment by 1%; only 20% of the homeowners think that the 6% increase in monthly payment will not feel too tight, but they can’t afford more. CEO Rick Lunny of Manulife Bank said: “these homeowners surveyed do not know that the current interest rate is the lowest.”
It is believed that there are many similarities between the Canadian real estate market and the United States before the subprime crisis. For example, Canada’s current home ownership rate is 70%, the highest in the world, while the home ownership rate in the United States was about the same before the bursting of the housing bubble; the real estate industry now accounts for 12% of Canadian GDP, and real estate was one of the main drivers of the economy during the US housing bubble.
Marc Cohodes, a Wall Street short seller who has been shorting the Canadian real estate market since 2015, told the media that the Canadian housing bubble is no less than that of the subprime mortgage crisis in the United States, calling Vancouver’s crazy housing market a mixture of money laundering, speculation and low interest rates.
David Madani, an economist who also believes that there are problems in the Canadian housing market, also said that the Canadian real estate market bubble is about to burst, Canadian house prices will plummet on a cliff, and national house prices will fall by about 30% to 40%, until they roughly correspond to household income, that is, in line with household income.
Not long ago, Home Capital Group, Canada’s largest non-bank mortgage supplier, was mired in a liquidity crisis, and its share price plunged 65% on the day of the news, the biggest one-day drop in the company’s history, which may have been the trigger for the “Canadian version of the subprime crisis.”