Weekend Charts
Facebook, housing, labor and growth
1: Last month, Toronto low-rise house prices rose about 2 times the equivalent to annual median household income
House prices rose by about $140k. Anyone saving for a down payment fell behind another couple years during the month.
Source: Realosophy.com
Meanwhile, BMO Capital Markets says the Canadian housing market closely resembles that of the late 1980s bubble.
“Real average house prices ballooned almost 100% in four years through 1989. The current trajectory (using January 2019 as the starting point) is keeping right on pace with that past episode, which ultimately ended at the hands of Bank of Canada tightening.”
2: Yesterday’s market cap collapse of America’s favourite birthday-reminder app was the largest in US history.
3: China’s exports soared to record highs over the past year, indicating a roaring global economy.
4: Labor participation rate rose in January as about 1.4 million people returned to the workforce - a significant development for a historically tight labor market.
People have been talking about the housing bubble in Canada for at least a decade. I think it's no question that prices are disconnected from a healthy level at which the average family can afford to live. Something has to eventually give. Either incomes go up or prices come down. If this doesn't happen we are on the path to fundamentally change society. This is gutting the middle class.
What do you mean by 'wipeouts'?
Would love your thoughts on the housing bubble and whether or not you think it'll pop - there seems to be widespread disagreement among the people I speak to. Also, 10 out of the 18 wipeouts occured since 2018 - why do you think that is and is that significant? Do you think there's any significance to the fact that the top 6 wipeouts eclipse those of 2000 and 2008?