Wolf Richter, Wolf Street:
The madness of the house “softens.”
There are all sorts of reports that the Canadian housing market, now the world’s No. 2 housing bubble behind New Zealand, is “softening” or “slowing down”. Today, Statistics Canada joins in that sentiment, with new home prices rising just 0.4% from June to July, the slowest year-on-year price growth, with prices in Toronto 0.2% and in Vancouver 0.3%. What is the current perception of softening: prices continue to rise, but as demand decreases and sales volume decreases, at a slightly lower insane rate. Home sales in July fell for the fourth month in a row.
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In recent months, the Bank of Canada has repeatedly cited the frenzy in the Canadian housing market as a result of the Bank of Canada’s unrestricted asset purchases and interest rate controls.
Therefore, the POC began to reduce its asset purchases last October. Purchase of mortgage support securities ceased. He stopped buying provincial bonds. It has shed most Canadian Treasury bills and repo holdings so far this year. In three more announced cuts, it reduced the volume of weekly purchases of Canadian government bonds, from $ 5 billion a week last year to $ 2 billion today. The overall effect was that assets on its balance sheet were reduced from Cdn $ 575 billion to Cdn $ 490 billion in March.
There may be some indication that this reduction in the BoC is starting to remove some fuel from the home market, those “softening” people report.
In July, the Teranet-National Bank House Price Index was up 2.0% from June. That’s still a big jump: 24% annually! – but rose 2.7% in June, 2.3% in May and 2.4% in April. And year on year, the index continued to rise to 17.8%.
And Greater Vancouver, Home prices rose 2.1% in July, 2.7% in June and 2.3% in May, “weakening”, with 17.1% year-on-year withdrawal. The POC’s unrestricted monetary policy, which began in March 2020, unanimously reversed the Vancouver housing recession that began in August 2018:
Greater Toronto areaInflation slowed to 1.6% from June to July, the smallest increase since February, after peaking at 2.7%, 3.4% and 3.0% in the previous three months. Year-on-year, the index has increased by 17.4%. Toronto saw a drop in home prices in 2017, following which little action was taken until the BOC survived:
The Teranet-National Bank House Price Index uses the “Sale Couples” method, similar to the Case-Schiller US Home Price Index, which compares the price of a home sold in the United States. Sold earlier this month with the same house price. It tracks how many more Canadian dollars are needed to buy the same house over time, and now needs more Canadian dollars than it was a year ago, just house price inflation, which is what the BOC has driven by its radical policies. .
My Hamilton, In Ontario, home prices rose 2.1% from June to July, but it was the smallest jump since February, with a 3.8% increase in June. The “softening” began. But year after year, the index has risen 30.1%.
All the maps here are the same size as the Hamilton map. As we progress on the list, home price increases have been lower than Hamilton for the past two decades, resulting in large vacuums above the curve.
In success, Home prices rose 2.1%, “falling” 3.6% from the jump in the previous three months. Year-on-year, the index rose 21%. The housing market has been stable since 2018 until the Bank of Canada went bankrupt in March last year.
At Winnipeg, Home prices rose 1.6% month-on-year and 10.5% year-over-year. Housing prices have been confirmed since 2013, until the BOC decided in March last year to rectify the unsustainable situation:
In Montreal, Home prices rose 2.5% in July, softening from a 2.8% rise in June. This index has increased by 21.4% year-on-year:
And Ottawa, Home prices rose 3.7% per month, but it was softer than the previous two months of 4.0% and 4.9%. Year-on-year, the index rose 28.9%:
In HalifaxThe Ternet index rose 3.0% this month. While that may seem crazy, it’s a brutal recession to speak from the 3.5%, 4.3% and 5.4% jumps in the previous three months. Year-on-year, prices rose breathlessly by 33.4%:
In Quebec City, Home prices rose 1.0% in July, softening from a 1.3% rise in June. Year-on-year, the index rose 10.3%:
In Coal and Edmonton, Cities in the oil crisis and the remaining two cities in the Ternet-National Bank housing price index, driven by optimism over the large increase in oil prices in the past and Canada’s immediate wealth in the oil zone. But that has not been the case since 2007, when it finally reached its peak and burst after an oil-powered household bubble.
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