The Economist recently crunched some numbers and found that Canadian real estate is overvalued by a whopping 78 percent. The Canadian Business magazine did an interesting post about the study, here’s the (link).
With an overvaluation of 78 percent, Canadian was ahead of Hong Kong (overvalued by 69 percent) according to the post. The U.S. market is currently undervalued by 7 percent.
A possible real estate bubble burst is becoming a big concern in Canada. According to several reports, home prices have started dropping in British Columbia, including Vancouver and Victoria. If the price drop becomes substantial, it could have an impact here in Whatcom County.
As part of a nation that has had recent up close and personal experience with that, Canada could have some problems looming.
I listen to CBC1 frequently and things aren’t all that great up there. Corruption, street crime, taxes, new immigrants flooding the market, home prices and all in a population a tenth of America.
Thanks for covering this. Most RE sites don’t want to cover it. You don’t have to be a bloodhound to smell the current Commercial Real-Estate Bubble. To say Commercial RE is over-valued is being coy: its a bubble second only to world currencies. There is NO way the practical usable value of location in the USA is anywhere NEAR the valuatoins being asked. Simple example is Amazon. They are slaughtering brick-and-mortars…. so the brick-and-mortar “location” is of much less value. Only the rich, old people haven’t realized it and the financing/loan structures have not been updated yet. When the Commercial RE melts, it will actually _benefit_ the residential RE because new businesses will be able to open and the “location” (local brick and mortar) markets will be more rich and oriented to what consumers need. Today, a small-time producer simply cannot buy a location to sell and so must concentrate on Internet-based marketing or other non-physical sales approaches. Its out of whack.
(Due to the trillions in central bank created funds which are being leveraged into commercial RE)