JASON HEATH | Special to the Financial Post | Published May 9, 2012
On average, a home in Canada costs 84% more than in the United States right now. The national averages are $372,762 at home versus $203,100 south of the 49th parallel. One might argue that something has got to give.
By analyzing housing starts in Canada, we can get a good indication of future trends in real estate. Warm weather throughout most of Canada was credited with being the catalyst for a very strong month of March in new homes. April was expected to be lacklustre, but those expectations were blown out of the water with 244,900 housing starts last month, compared to an estimate of 204,000. This was the best month in about five years, well prior to the onset of the 2008 recession. These numbers have some questioning the sustainability of starts as well as eliciting further calls for a housing bubble here in Canada.
Of particular interest was that nearly two-thirds of new homes last month were multifamily units, which includes condominiums — a 27% increase year-over-year on a seasonally adjusted basis.
Canadian housing also topped a recent global list published by the Economist for 12-month price change, increasing 7%, while ranking high on a comparison of home prices to both rents and average incomes. Overall, the Economist suggests that Canadian homes are 54% overvalued relative to a 19% undervaluation in the U.S. read full article