Canada Real Estate Market: The Next Big Short?

Posted by Marc Faber & Canadian Housing Price Charts

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“I don’t think Canada is very inexpensive any more. I travel there all the time, it’s rather on the expensive side. I think there’s significant risk to the Canadian economy,” The Canadian housing market may very well be in bubble territory,he said, adding that in addition to Toronto and Vancouver, other cities such as Calgary were also seeing significant price gains. – – Marc Faber

Ed Note: Here’s the “Real Price of TSX Real Estate” & some of the latest Canadian City price action below that:
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The chart above shows the “Real” price of gold (Gold/CCI) and the real price of real estate (RE/CCI). Gold miner’s profitability depends on the nominal price of gold and the cost of getting the metal out of the ground. When the cost (fuel, and industrial materials) goes down, the real price rises even in the absence of a nominal price rise. Housing is a bundled commodity (lumber, steel, copper, materials, fuel to get to the site) and the TSX-RE/CCI ratio (green dotted line) plunged with the spike in oil prices in 2008 as did the real price of gold (dotted yellow line). But by the end of the 2007-09 crash the real price of gold zoomed with the BoC ZIRP policy and the real price of TSX real estate rallied but on a much more subdued trend; the real price of gold continues to outperform real estate. A falling CCI is excellent for gold miners and ultimately good for long term house buyers as the replacement value for real estate falls with the CCI.
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