Ok, so yesterday I spoke of The Economist article about how expensive Canadian homes had become, after a 13 year housing boom that reality was about to catch up with the theory: All performances (eventually) revert to the mean.
So imagine my surprise when this morning StatsCan published the new building permit for December 2011 that showed an 11% rise in permit requests...
Now what's interesting here is not the trend but the level! Frankly in building permits the trend is far from clear, but the level is important here, it is the first time that the number exceeds the June 2007 peak (not shown here -- take my word for it). That means that despite all the statistical analysis, the view that Canadian are overly indebted (they are) construction is booming in Canada. The increase was from "multi-family" units in Ontario and Alberta -- in fact that Ontario data is minde boggling, it represents a 28.9% increase to $1.9 billion.
Is the a representation of a market on the verge of imploding, the last hurray before reality sets in? I have no idea. Not only that, even if permitting drops of in January by 15%, there has been many instance of such reversals in the past. But it does show a market that has a great deal of confidence about its future, which far exceeds what the "official" source are implying.
Granted there are "rumours" of heavy speculative inflows in the Toronto market which is aggravated by foreigners looking for safe house locations (and Canada is seem as a haven of peace these days). I mentioned this before, downtown Toronto condo developments are seeing up to 60% take-up rate driven by "financial investors" -- people who are looking to make a quick turn on their cash...
Things are getting interesting