With a national average home price of 416K (compared the US average of 250K), 5.3X the average household income of $78K, Canada has the distinction of being one of the top 3 least affordable realty markets in the world today. And worse than the US was at the peak of its bubble in 2006, before US prices plunged an average of 35% and more than 50% in some of the ‘hottest’ areas like Phoenix and Vegas.
See this link for slideshow of Top 10 most unaffordable housing markets in the world.
In simple terms the Canadian housing bubble is understandable. A major commodities producer, we were riding high on global sales and thought we were invincible until the commodities boom collapsed in 2008. Since then Canadian governments, banks and households continued on the “spend/lend it and growth will come” theory. Now Canada has the highest debt levels in decades as global demand has continued to weaken.
With oil now trading below the prices assumed in most optimistic budgets, the nation comes into what is likely a prolonged demand decline, sorely unprepared. Old lessons will be learned the hard way once more.