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Do you remember when the Imperial Palace in Tokyo was ''worth'' more than the entire state of California?
At its height in 1989, real estate in Tokyo was valued 350 times (!) as much as top property in Manhattan.
That's the moment when the Imperial Palace in Tokyo was notionally worth more than all the real estate in California.
Ridicolous, right?
The real estate bubble in Japan burst when the BoJ started raising rates and private debt couldn't be rolled over at attractive rates anymore.
At the peak, Japanese private debt to GDP was 213%.
Well, today's Canadian private debt to GDP is higher: 235%.
The Canadian housing market has delivered stellar returns in the past decade, but as the Bank of Canada raises rates to fight inflation and hence pushes mortgage rates up the domestic real estate market is starting to feel the heat.
Given the levels of private debt involved and the massive overheating of the Canadian real estate market, I think this is just the start.
In general, I expect real estate prices to drop 15-20% next year.
Do you think that's a lot?
It will just bring us back to early 2021 valuations...
Source: Alfonso Peccatiello
At its height in 1989, real estate in Tokyo was valued 350 times (!) as much as top property in Manhattan.
That's the moment when the Imperial Palace in Tokyo was notionally worth more than all the real estate in California.
Ridicolous, right?
The real estate bubble in Japan burst when the BoJ started raising rates and private debt couldn't be rolled over at attractive rates anymore.
At the peak, Japanese private debt to GDP was 213%.
Well, today's Canadian private debt to GDP is higher: 235%.
The Canadian housing market has delivered stellar returns in the past decade, but as the Bank of Canada raises rates to fight inflation and hence pushes mortgage rates up the domestic real estate market is starting to feel the heat.
Given the levels of private debt involved and the massive overheating of the Canadian real estate market, I think this is just the start.
In general, I expect real estate prices to drop 15-20% next year.
Do you think that's a lot?
It will just bring us back to early 2021 valuations...
Source: Alfonso Peccatiello
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