Housing Bubble Denial
Some puzzling comments in today’s Globe story casting cold water on the notion that there is a housing bubble.Â The story makes the classic anti bubble argument that national averages conceal a lot of local variation, reflecting local conditions.
“Toronto-Dominion Bank economist Pascal Gauthier says the diverse nature of Canadaâ€™s real estate market means a U.S.-style bubble is not likely in the works. Those national figures are largely driven by sales in just two cities: Toronto and Vancouver.
â€œTo speak of a bubble, you have to be looking at a pretty broad-based phenomenon,â€ he said. In the United States, â€œprices pretty much doubled almost everywhere during the boom,â€ and that is clearly not happening in Canada.”
Well, actually prices have doubled on average since they began to rise in 2000. And the Teranet index shows that Toronto prices, while well above average, have lagged the trend a bit over that period. And Toronto makes up 40% of the index, so it has dragged it down rather than boosted it. True, Vancouver prices have risen well above average since 2000, but the increase is pretty generalized. Its easy to check out the overall picture at the link helpfully supplied by Nick Rowe to readers of this blog.