Housing Affordability: How Does the US compare to Canada, China, Australia, Japan, Ireland, UK

Mish, As a Canadian follower of your excellent commentary I will answer in regard to the Canadian Real Estate bubble which crested in 2013-2014 and is now starting to deflate as evidenced by the BOC's emergency rate cut to shore up the Big 5's balance sheets and to help cover a spike in NPL's (mostly oil related but the fallout into the mortgage market is inevitable) let me say this. I am aware of the extreme overvaluations in markets like Vancouver, Calgary, Toronto and Ottawa even though my hometown is Winnipeg (the largest urban centre between Calgary and Toronto-roughly 3400 kilometres). Although not represented in your article it is in no way immune to the same loonie (pardon the pun) metrics of larger Canadian centres. Having lived in the city off and on for nearly 40 years and having bought and sold multiple properties let me say I am astounded at what has transpired in the last 40 years. I keep a pretty close eye on the market, even more so given the last decade's explosion.

I purchased my first property for $18,000 (1979) with a 25% down conventional mortgage, it is still standing and has had upgrades but that is mostly maintenance and it recently (2014) sold for a staggering $215,000, a 1194% increase in just under 35 years. It is in a decent neighbourhood, close to amenities, etc… pretty average really but I I mean really, almost 1200%. Bubble much... not if listening to the Real Estate association and assorted 'book' talkers I guess.

Now if wages had accelerated at that level then whats the noise all about, unfortunately they have not. To give an example, my annual salary in 1979 was a little over $14,500 so using the same metric I should be earning a bit more than $173,000, let me assure you I am not.

If housing was the only debt issue then a deflating market which would slowly (or quickly) put 1,000's of property owners under water could possibly be contained but this is unlikely to be slow or contained. The cracks are already starting to appear, for the first time in many years supply is far outstripping demand, average time on the market is expanding, bid versus ask is widening and more importantly, credit worthy buyers are fast drying up.

Economically Winnipeg and Manitoba have not just flatlined but are in the first phase of a major recession, we have a socialist government that has put a stranglehold on business, new startups are non-existent, established businesses are contracting in manufacturing, service and retail. In the last month our city has seen Target implode, Sony Stores exit, Carbelas drop 50%, hotel expansions cancelled and mining, forestry are at multi year lows. The only expansion that is happening are taxpayer funded capital intensive projects. The fact is most of the economic activist in the last 3 years are almost entirely funded on the back of borrowed future taxes. I will not even touch the absolutely egregious mismanagement of these projects that have gone over budget by 100's of millions of dollars.

So as a Winnipegger I ask, with job losses mounting, economic activity contracting, wages and income declining while all forms of taxation, utilities and mandatory fees (licensing, permits, etc,,) increasing at 2 and 3 times the rate of inflation exactly how is a collapse not coming.

I may and hopefully am wrong but we may be on the leading edge of a disaster the likes of which this generation has ever seen.