Canada’s housing is 63 per cent over-valued says Deutsche Bank

Canada’s housing is 63 per cent over-valued says Deutsche Bank

Canada’s housing is 63 per cent over-valued says Deutsche Bank There’s always plenty of debate when economists suggest that Canada’s housing is over-valued by 20 per cent so how do you feel about this one? Deutsche Bank has published an overview of some of the world’s real estate markets and says that Canada’s in over-valued by a massive 63 per cent! That’s more than double the figure that the Bank of Canada estimated in December. The bank’s calculations include comparison between median house price and median household income and house prices in relation to rents. The report also takes into consideration the high levels of household debt and the possibility of price correction. Read the full story.
18 Comments
  • Arbitrage 2015-01-09 9:09:05 AM
    Why draw the comparison between median prices and median domestic income when a considerable number of the dollars spent in the larger markets are of foreign origin? Possibly a contributing factor to the "wow factor" this number produces?
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  • Ron Butler 2015-01-09 10:50:27 AM
    I think that everyone in the mortgage industry needs accept the fact that Canadian real estate has likely over reached. That said: by how much? when will the correction come? how regional will the correction be? will the market correct or simply stagnate?

    It's mostly unknowable, who the heck would have guessed a year ago that oil would be $48.00 a barrel. That's why I have always hated the role of "predictor" with clients. Some clients love to ask and sadly some brokers love to give their "expert advice" on the future of interest rates and house prices.

    We simply don't know: Garth Turner has made a career out of being wrong for 6 years till someday he might be right.

    Here's the thing I do believe, if we have seen 20 predictions this real estate market is overvalued and I think that 20 would be the minimum; then for those of us who advise or deal with private mortgage investors let's be VERY careful. Let's be conservative, let's point out a systemic risk in the chance of a market wide reversal of values, let's talk to investors about 75% LTVs on very simple to re-sell properties. The truth is that 85% LTV second mortgage or speculative development mortgages are extremely worrisome in a marketplace where there have been 20 warnings about overpriced real estate.
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  • Angela Wong-Liao - Invis 2015-01-09 1:25:19 PM
    I believe our role as mortgage professional is to educate and caution our clients. I agree with Ron that we do not have crystal ball, who knows but all these predictions should have some merits and we should caution our clients, particularly private investors.
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