Canadian housing is far outpacing the growth of its economy, shows government stats. That’s what 2020 home assessment values show, provided to us by Statistics Canada (Stat Can). Home prices added billions in value last year, as you might have guessed. What you may not know is Canadian homes have added so much value it’s now worth 3x the output of Canada’s economy.
Canadian Residential Real Estate Is Now Worth $6.1 Trillion
Canadian residential real estate prices have hit an obscene valuation, even when sandbagged. National assessment value hit $6.1 trillion in 2020, up 2.5% ($146.0 billion) from a year before. It’s not quite the growth rate you’d probably assume from monthly home sale reports. However, it is a mind-blowing amount considering this is a conservative estimate. The Queen should totally take out a HELOC on the country and buy herself a nice hot tub.
Canadian Residential Real Estate Valuation
The aggregate assessed value of Canadian residential real estate, in trillions of dollars.
Source: Statistics Canada; Better Dwelling.
The Value of Canada’s Homes Is 3x The Output of Its Economy
Numbers this large are hard to appreciate without context, so let’s give it some. Canada’s housing is valued at more than 300% of the country’s gross domestic product (GDP). In contrast, US housing was worth just 170% of its GDP over the same period. As pricey as American real estate is, the value of home prices relative to its economy is almost half that of Canada.
Canadian Residential Real Estate Valuation
The aggregate assessed value of Canadian residential real estate by province, in trillions of dollars.
Source: Statistics Canada; Better Dwelling.
Nearly Half of The Country’s Home Values Are In Ontario
Breaking it down by provinces, Ontario’s residential real estate is the bulk of the value. The province’s housing market reached a $2.8 trillion assessed value in 2020, up 6.1% ($158.6 billion) from the previous year. Nearly half (46.6%) of Canada’s home price valuation is in the province.
BC Has 13% of Canada’s Population But 24% of Its Housing Value
British Columbia (BC) residential real estate is one of the few markets to have seen values slip. The province’s housing hit a $1.4 trillion assessed value in 2020, down 4.2% ($61.0 billion) from a year before. It’s an astronomical value, representing 23.5% of the country’s home values. Even more impressive when you realize the province only has 13% of the country’s population.
It’s well-established the Canadian economy is very dependent on real estate, but this data is wild. Valuations fail to reflect the increase in market value home prices saw last year. It’s not even close, to be totally honest. Even with conservative valuations, housing dwarfs the size of Canada’s economic output.
This seems like it shouldn’t be possible?
Present value is based on future expectations, so right now Canadians are betting the economy will grow at double the rate of the US economy. Not sure how that’s possible even if the population were to double, considering a third of all income for new population growth goes to non-productive servicing.
The credit system allows the borrowing of up to 5x productivity, so this makes sense. I mean, it makes sense it’s possible, it doesn’t make sense to value a whole country’s housing at the same value of no one owning a home and buying it all at t these prices.
In Canada it is possible because of the money and successful businesses
That is the best joke I’ve heard in a while.
Assessment values are lower than real values too.
Why would you think they’re lower?
BC Assessment prices are about 20-30% lower than what one could sell the house at. I know. I had to have an appraisal on the home in the spring. Comparing BC Assessment to the appraisal, just over 20% difference. In comparing more current prices, now closer to 30%.
I think Mortimer proves this wrong multiple times per day.
https://twitter.com/mortimer_1
In Ontario properties are currently assessed as of January 1, 2016.
BC assessment falling 4% is interesting with the BC board saying home prices keep rising. BC is one of the few provinces that use market-based assessments.
Check sales vs assessment on the bc assessment site
It’s on the assessment site
Why isn’t it $100 trillion?
Canada is back!!! Economic miracle.
The average price in Canada is $716,585 according to CREA and there are 15 million dwellings.
Residential real estate is actually worth $10.8 trillion, about 4.3x GDP.
Real estate doesn’t work that was since there’s no possibility of generating credit sufficient for liquidity. They can keep printing value for a few thousand transactions and then projecting that value but when it expands no one believes market value.
How does this compare to other countries?
Canada must be such a desirable place to live.
Is it really? I don’t think so.
A growth-based economy addictively dependent on “growth” and competition by no means can be sustainable, nor healthy and in harmony with the nature; it just defers — accumulates — problems in to the future. It is at the core of many predicaments we find ourselves in. Why isn’t this so obvious is just dumb! Vying for more and more with no caps is indeed a cursed living dream if we clear our eyes; it’s inevitably lead to rampant fad-based behaviour. Our way of living does not encourage or incentivise, nor recognise, or define optimimum points, like, when we released/relieved from religiosity, we have been unable to rethink and reproduce it in more meaningful scientific ways. We let totally lose our grip on the art of moderation and didn’t even bother about it as we were so proud of our modernity and full of sugar high happy for a while.
The Bank of Canada doesn’t have to print money when the citizens do it for them.
“I’ll buy that box for waaay more than the previous person paid for it! Because!” Cha-ching, wealth generated. Pure genius.
How could one profit from this current situation? At the moment is looks like just a lot of people will either get screwed or see stagnation for a decade if the economy doesn’t deliver.
How does a small, medium and large scale investor benefit with the info?