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Canadian House Price – Bubble yet


A few weeks ago, I blasted a Canadian newsmagazine over its coverage of the Canadian house price rise over the past few years, and how there was not really a bubble (then maybe there was) without giving any facts.

In Canada, looking at the principal cities house price to median income we have:

Montreal:  4.2x
Toronto:    5.6x
Vancouver 7.0x
Victoria   9.0x
Halifax:  3.5x

BTW these are those I remember of the top of my head, although Calgary house price are high, income (all that oil business) have been rising even faster, so that although Calgary is expensive in absolute term, its not in terms of income.  Finally anything seriously over 4x is considered overvalued territory.

Below is a diagram of the U.S. (countrywide average) median income to house price.  



 (Source: The  Big Picture Blog)

As can be observed U.S. house price are still not “affordable” by any sensible metrics (despite what the medias are saying) that have stood the test of time.  Last week, an amazing incidence, a house that was listed in a nice neighborhood of Vancouver sold for $2.5 million, about $600k over the asking price.  Its possible via Google Map to see this house, nothing spectacular, it looks like an average 50/60’s house with probably 3 bedrooms and a finished basement – lets call it 2,000 sqfeet.  The question is how can anyone justify $2.5 million for that?

I have no answer; moreover, there were 25 bidders on the house!

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