Tracking the Great Canadian Real Estate Bubble

Apparently Vancouver has now tagged Toronto “it” in the Great Canadian Real Estate Bubble. While the former is decelerating from absurd to only insane price gains year-over-year, the latter is hanging in at absurd, thus threatening Vancouver’s bubble price-gain lead.

Canada bubble

Look at how nice a job those Canadians are doing at leaving the U.S. behind in the bubble game. Okay, the following chart, while provocative, is bizarre. I can accept converting to a common currency, and alibi the distorting effects of Vancouver, but it should not compare average Canadian prices to median U.S. prices. That’s just wrong. I’ll leave the graph up, but this is a distorting view.

Widening gap

More here.


  1. Bob jones says:

    Have you taken a look at ?

  2. Christopher Green says:

    I am sure that things are different this time in Canada.

  3. Notice they are comparing median home price to average home price… it is nice to compare apples and apples.

  4. Hi Paul,

    Toronto and Vancouver are definitely bubblicious, but two cities do not make a 'Canadian' real estate bubble.

    The rest of Canada, as the other graph posted in the comments implies, is not following the same trajectory. There are a number of key structural differences between the U.S. and Canadian housing market. More on this here:

  5. Also, here's the Economist's interactive chart where you can compare national prices in Canada vs. the U.S. (and other countries) over various historical time periods:

    • Ben Rabidoux says:

      Don't put much faith in The Economist's house price graph. They made a huge blunder using the quality-adjusted New House Price Index to measure Canadian house prices. BIG mistake! By this ridiculous index, house price in Vancouver are lower nominally now than they were in the late 90s. It's entirely out of touch with reality:

      • Dear Ben Rabidoux,

        Without wasting much time I would like to succinctly sum up why you sir are a charlatan. The link to your blog provided, challenging the methodology of the New Housing Price Index contains the following errors in theory and/or logic, which even a non-graduate could follow:

        1)The purpose of the index is to measure the price changes in new housing, therefore you of course need to hold the asset measured constant, by adjusting for the inconsistencies that arise in a given locale (close peers in property data) over time [re: your gold roof, and average house size comments].
        a.Gold roofing would also not be an improvement to be adjusted by anyone with a basic knowledge of physics, real estate development, or inferior good substitution.

        2)Fortunately, the NHPI provides a sub-aggregate data series for land values, which complementarily provides a useful residual building data series. Using these series’ independently or collectively, with a starting point of 1993 you would of course arrive at an index level – and thus price level – higher than at origination [re: “build a brand new home in Vancouver today cheaper than you could in 1993…..and that is in NOMINAL dollars”]. *Hint: your chart shown is 1999-2011, and the current data series is base-lined to 2007.

        3)That you do not like the period being illustrated by the “1990” data start date that is fine; however, castigating the index for the date of data collection being after a real estate decline is hardly a fault of the index methodology. Regardless of the time period shown it does indeed measure the change in new housing prices from 1990 onwards. To debate that it should have started earlier is.. well, the ravings a lunatic by the definition of arguing with the inanimate [re: “Other issues with the Economist data”].

        In conclusion I am actually somewhat concerned that I may be rebutting a bag of cats, as it genuinely appears as though in your online diary you are arguing that this index is not something it in fact does not purport to be.

        For interested and intelligent commenters, further reading on this index can be found on StatsCan here:

        • Swing and a miss! You missed the point entirely. I fully understand why the NHPI is used as a subcomponent of the CPI. My concern surrounds the use of that index as a gauge of real-world meaure of house price increase. There is a massive dislocation between the NHPI and all other measures of house price increase (Teranet, CREA). Which best reflects the aggregate rise in house prices? If you really think it is the NHPI, you, sir, are a fool.

  6. Wow….what a bubble. They are leaving the US way behind.

  7. Averyjohnson50 says:

    Could you tell me more about this Great Canadian Real Estate bubble? Based off the graph, Canadian average home prices seem to be rising. Why the increase for average home prices and the decrease for median home prices?

  8. It looks like the news in 2006- “houses can only go up in price”, it’s almost the same as in Israel now. The housing prices our just too high for to buy. I think the same things that happened in America in 2008 housing bubble will hit the Israeli market soon.