Canadians know real estate prices have grown very quickly, but most likely have no idea how fast. US Federal Reserve data shows when US home prices took a dive during the Great Recession, Canadian prices didn’t. Instead, Canada has flooded the market with a number of policies designed to increase the amount of debt households can carry. Consequently, Canadian home prices have seen prices grow not twice, or even ten times as fast as US home prices. They’ve grown a whopping 29x faster.
Canadian Home Prices See Accelerated Growth
Canadian real estate prices have been on a tear, even just this year during a pandemic. The price of a home in Q1 2020 is up 2.4% from the previous quarter. Compared to last year, prices are up 3.4% once adjusted for inflation. Over the 12 months period, all of the annual growth came from just the two most recent quarters.
Canadian Real Estate Prices
An inflation adjusted index of Canadian real estate prices, vs the US.
Source: US Federal Reserve, Better Dwelling.
To contrast, US home prices made a much slower climb in the quarter, but still saw roughly similar growth. The price of a home in Q1 2020 was up 0.5% from the previous quarter. Compared to last year, prices are up 3.3% once adjusted for inflation. This was the slowest annual rate of growth for US home prices since 2013. While Canadian price growth is accelerating, US home price growth is decelerating.
Canadian Real Estate Prices Grew 29x Faster Than US Prices
Recent acceleration while the global economy slows down isn’t just a new phenomenon – it’s been happening since the Great Recession. Canadian home prices have increased a whopping 88% since 2005, almost doubling in 15 years. To contrast, US home prices have increased just 2.9% over the same period. In other words, Canadian home prices have increased 29x faster than US home prices. That’s adjusted for inflation as well.
Canadian home prices have increased at a breakneck speed, along with household debt. This isn’t just in major cities either, this is a national index. Cities like Toronto and Vancouver… and even smaller markets like Niagara, have likely over performed this rate of growth. Locals may not understand just how much prices have increased from up close, but if zoomed out against the global economy – it’s astronomical growth.