The short-lived house price inflation in the American housing market, is no match to that of Canada’s real estate market. It has been over ten years since America’s housing market experienced inflation in the housing market, but the Canadian hot real estate market is constantly on the headlines on a daily basis. Issues surrounding the Canadian real estate market, ways to curb the prices, debates on the impacts of the news mortgage laws, and the tax imposed on foreign investors; and effects of the leading real estate markets in Canada on other markets, has become a part of most Canadian residents.
But for most analysts, all this chaos in the Canadian housing market cannot be matched up with that of the U.S. For some, they are hopeful that there will be a decrease in the Canadian housing market, but it won’t come crashing as that of the U.S.
But taking a look at each housing market framework, making a comparison between Canada’s short-lived housing situation, and that of the high raving housing prices in the U.S is a worrying issue.
In most cases, when comparison is being made of two real estate markets, the main focus is on the price. How does the course of the Canadian housing prices match up against the U.S.?..
According to statistics from the Federal Reserve Bank of Dallas’s International House Price Database, there is proof that the Canadian housing prices inflated much more than the U.S, and it could rather be compared to that of Japan’s housing market in the 1980s.
Also taking a look at the housing prices of both countries since 2000, it could be seen that the Canadian housing prices was much more expensive that of the U.S. bubble peak.
But the known facts still remains that same, that the Vancouver and Toronto markets are the major push of the Canadian housing prices. Vancouver market takes the lead from all other markets, as its housing prices skyrocketed at an unbelievable rate, while Toronto followed. These two hot markets overcome all other markets , including the over charged markets of Miami and Lag Vegas.
However house prices are not the only variable that one can use to make comparisons. Another major element is the debt rate status. Taking a look at the U.S market, household debts, to be precise, mortgages are the main contributing factor for the increase in house prices.
Going through the household debt-to-GDP ratios of both countries in the first half of 2008, Canada overshadowed the amount reached by Americans.
Much comparison could be done by comparing the household debt, to disposable income for these two countries ,but this comparison shows that Canada is just a modest rate behind the U.S.
However, some critics have disagreed that household debt to disposable income, is not a reliable method to make a comparison, as the debt is not the key issue but instead, it’s the capability to handle and manage it.