Monday, May 11, 2009

Canadian vs. U.S. new home prices

From Rebecca Wilder's excellent News N Economics blog:


  1. Canada doesn't have a mortgage interest deduction for tax purposes - so their house prices are usually much lower than in the States so as to compensate, which makes these findings more jarring.

  2. Also Canadian banks are more strict, there really is no sub-prime and teaser interest rates. Also, no Fannie May or Freddie Mac which is a good thing.

  3. ...and yet canada new home prices are still 1.6 times the normal prices according to this graph.

  4. In 1998 1 US$ bought you 1.54 CAN$ .

    In May of 2007, 1 US$ only bought you 1.10 $CAN .

    In January of 2009, 1 US$ only bought you 1.22 $CAN .

  5. Hey Lance,

    According to this graph home prices are 1.5 times the norm in the US as well.

    What does 1 US$ get you in US$ today?

  6. Canada's home prices are WAY overpriced too. Look at Vancouver.

    Yes it's far more desirable to live in BC than say Los Angeles BUT LA has more industry, more money, more wealth, and more people.

    So how the hell are prices in BC going so high?

    I've been on BC dedicated blogs and they can't answer that question either. Money is coming from somewhere..some say drug money, others say wealthy Asians from Hong Kong and China.

    Either way, it makes no sense. Some are arrogant enough to say it's simply because people want to live in BC. OK sure...but the mortgage still has to be paid for. So how?

    There are going to be major corrections there too. It simply can't sustain such high pricing when people over there get paid 2/3 what people here get paid.

  7. We don't have Fannie or Freddie but we do have CMHC

    Furthermore, Canadian home prices have doubled since 2001. It's not fair to use new home prices since new homes were much more expensive in Canada than the United States in 1998.

    Canadian Home prices are now around $350,000 and household income is about $75,000. This ratio is about 40% higher than the US at the height of its bubble.