Wednesday, February 24, 2010

Teranet House Price Index for December 2009


The composite index above the pre-recession peak

Canadian home prices in December were up 5.2% from a year earlier, double the 12-month advance recorded in November, according to the Teranet-National Bank National Composite House Price Index™. December was the third consecutive month in which prices were up from a year earlier, after 10 consecutive months of 12-month deflation. The turnaround is due to eight straight monthly increases in the countrywide index. December's robust 1.2% monthly gain pushed the composite index above the pre-recession peak, that is, to a new record.

Teranet – National Bank National Composite House Price Index™

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The December monthly rise exceeded 1% in four of the six metropolitan markets surveyed: Calgary (1.6%), Vancouver (1.3%), Toronto (1.2%) and Montreal (1.1%). For Montreal it was the first vigorous increase in four months, corroborated by data from the Greater Montreal Real Estate Board showing a tightening of the resale market in December. The Vancouver gain, though slightly greater than Montreal's, was the smallest recorded in the seven months since prices in this market began rising again. For Toronto it was the second smallest.

Halifax-area prices declined 1.9%, their first retreat in six months. The monthly rise in the Ottawa market was 0.4%, about the same as in the previous two months.

The 12-month appreciation was 7.1% in Toronto, 6.2% in Ottawa, 5.1% in Vancouver, 5.0% in Montreal, 2.9% in Halifax and 0.1% in Calgary. It was the first time in 18 months that Calgary prices were higher than a year earlier. Vancouver having passed that point in November, 12-month deflation is now a thing of the past in all of the markets surveyed. However, Calgary prices are still down 9.3% from their pre-recession peak of August 2007 and Vancouver prices are down 1.1% from their peak of June 2008.

Teranet – National Bank House Price Index™

The historical data of the Teranet – National Bank House Price Index™ is available at

Metropolitan areaIndex level
December 2009
% change m/m% change y/y
Calgary159.031.6 %0.1 %
Halifax122.21-1.9 %2.9 %
Montreal127.991.1 %5.0 %
Ottawa122.780.4 %6.2 %
Toronto119.651.2 %7.1 %
Vancouver149.001.3 %5.1 %
National Composite132.151.2 %5.2 %

The Teranet–National Bank House Price Index™ is estimated by tracking observed or registered home prices over time using data collected from public land registries. All dwellings that have been sold at least twice are considered in the calculation of the index. This is known as the repeat sales method; a complete description of the method is given at

The Teranet–National Bank House Price Index™ is an independently developed representation of average home price changes in six metropolitan areas: Ottawa, Toronto, Calgary, Vancouver, Montreal and Halifax. The national composite index is the weighted average of the six metropolitan areas. The weights are based on aggregate value of dwellings as retrieved from the 2006 Statistics Canada Census. According to that census1, the aggregate value of occupied dwellings in the metropolitan areas covered by the indices was $1.168 trillion, or 53% of the Canadian aggregate value of $2.207 trillion.

All indices have a base value of 100 in June 2005. For example, an index value of 130 means that home prices have increased 30% since June 2005.


Marc Pinsonneault
Senior Economist
Economy & Strategy Group
National Bank Financial Group

Teranet - National Bank House Price Index™ thanks the author for their special collaboration on this report.

1 Value of Dwelling for the Owner-occupied Non-farm, Non-reserve Private Dwellings of Canada.


JimTan said...

Yes, folks! This too is reality!

Gabriel said...


I don't know why you don't ban JimTan. I don't mind his opposite views, but this "man" shows no respect to others and constantly condescendingly spews vitriol.

To, JimTan's defense it's not as if mudslinging doesn't occur both sides, but far too often I see him stirring the pot before any sling has even occured.

With all that said, time and time again price falls occur often in less than a year that can wipe out a decade of wealth. More risk that it's worth, leverage is a dangerous thing to play with unless you're sure.

van_coffee said...

For the record, I think Jim Tan is hilarious. Dumb, but hilarious.

Please do not ban Jim Tan.


Anonymous said...
This comment has been removed by a blog administrator.
Unknown said...


I think he's funny too. I loved a while back when he said something like "renters are the losers living in the west end on a surrey budget".

Hmmm rent where I want to live or own where I dont want to live, tough choice...

Not to say there is anything wrong with surrey, I know lots of people who like living there. But if someone wants to live in the west end I see no reason to own in surrey rather than rent downtown.

It's nice to have a contrary point of view on a blog, even if it does seem condescending at times. Chad was the only other bull (well bear turned bull) who posted on here and he seems to have vanished since buying.

mohican said...

I don't mind JimTan. He's funny and has an interesting point of view.

Prices have risen a lot this past year in Canada and it is fair to acknowledge this fact, since it is a fact!

Whether the prices gains are sustainable is another question altogether and the debate about this is what the blog is all about.

I believe that, over the long run, prices of financial assets, including real estate, will trend around a level supported by the net income generated by that asset.

Over the short term, there are many factors, human behaviour / emotion being the biggest one, that affect prices.

All financial assets are prone to booms and busts because of the fallibility of human nature and the gross mispricings that can occur due to manias and panics.

JimTan said...

Hello good people of Housing Analysis,

I am sorry that you are offended by my sarcastic tone. I promise to tone it down.

On this site, I have tried to offer a useful critique of the work done on this site. For example, I have suggested that historical data like Teranet is less useful than timely market information. I have also criticized the use of simple financial analysis in lieu of a fundamental analysis of demand and supply.

On RE Talk forum, I have been engaged in a difficult battle with some trolls who offer a superficial case for their ultra-bearish views. Their analysis is insufficient and the flaming/defamation is unacceptable. In the latest 'debate', I have questioned whether they are in a position to criticize the economic analysis of qualified people. See the 'Rennie' post on Feb 25th.

In the last two years, I have been surprisingly and consistently right! As a bear, I was just in time to catch the beginning of the recession. As a cyclical investor, I was able to catch the bottom in the stock and RE markets in 2009. I hope that I have offered some useful information.

Unknown said...


I didnt read your link (im sick and feeling lazy), but I assume it is about rennie. Correct?

Rennie makes money when real estate sells. When prices are going up it generally sells better.

He has a huge conflict of interest. Us average Joes could buy real estate tomorrow if we wanted to. We are just trying to decide for ourselves when is a good time to buy.

Someone with a vested interest in seeing real estate increase in value is not a good person to speculate on the future price of a house. It would be like asking the CEO of a company if now is good time to buy stock in his company. (well not quite the same, there are laws about that, agents however dont seem to have any laws restricting them from speculating on the future value of real estate)

Not to say they arent knowledgable about the subject, but they hardly have an unbiased point of view.

JimTan said...


Read the link!

Unknown said...

OK I read it. You said rennie was right last spring. Thats the one you were talking about right?

Well he was right, but he still followed the mantra "real estate goes up". You dont think there were real estate "experts" in the states who said it would bounce back after a few months? And isnt it possible they were wrong?

My point is you will probably never hear Rennie or anyone else with a vested interest in seeing RE go up say "there is a massive crash coming"

Even if they believe real estate is over valued, the best you will get out of them is "I expect low to moderate price gains for the next several years"

That is what most "experts" people are saying now. If this is true I see no reason to buy now. If prices increase at inflation for 10 years this will kill all the speculators bleeding cash every month.

The only way any investor can actually make money in vancouver RE is with rapid price gains. If that stops then they will leave the market and I believe we will see a return closer to fundamentals.

I am not saying I know more than Rennie or even the average realtor. However their opinions arent really worth anything because they want to see RE go up, so thats what they will say is going to happen. They might be right or they might be wrong.

Just out of curiosity did Rennie predict the 15% hit RE prices took in 2008?

jesse said...

Unless a homeowner sells, Rennie is wrong. Simple application of the quantum theory of asset bubbles.

JimTan said...


It is important to track key opinion makers. It is news when they think that the market has changed.

In May 2008, Rennie said clearly that the market was in balance. So, bulls and flippers needed to take note. I think that Rennie was becoming cautious, but still optimistic based on his analysis of Vancouver demand and supply.

No one anticipated that Bush/Paulsen would allow Lehman to fall. The subsequent global catastrophe was unprecedented. IMO, it caused half the damage to the American RE markets. In Canada, it became a buyers market as sales pummeled.

In late 2008, Rennie doesn't go into denial. The numbers look bad. He does point out that governments can rescue the economies, and that low interest rates = affordability will provide support for the RE market. As we know, his conventional wisdom was right.

It was an important moment (May 2009) when this RE bull was willing to say that the market had turned. He was looking at the numbers. No magic there. I came to the same conclusion by looking at the sales activity. Rennie made a public call on market timing, and he was right.

Rennie isn't an expert on economics or markets. But, he is one of the most well informed people on his turf. So, he deserves the appropriate respect. Rennie may have made his fortune through marketing. But, that doesn't invalidate his opinion on the state of the market.

Stay tuned for Rennie's speech in may 2010.

Unknown said...


I look forward to Rennie's speech. I was unaware that he made a yearly speech regarding the state of Vancouver RE. I always figured he just made a press release when he felt RE hadnt had enough headlines lately.

It will be very interesting to see what happens in the coming months and what he makes of it. So far this year seems to be tracking 2008 quite closly. If listings continue to outstrip sales the way they are now then it will be interesting what Rennie says. In my opinion we have almost reached the affordability ceiling again, much like we did in Spring 2008. Listings balooned well before things got ugly in Fall 2008. When the financial world went into panic it just sped up what was already happening; a return to fundamentals.

The main difference between this Spring and Spring 2008 is that there is virtually nothing the government can do to increase affordability, in fact they are taking baby steps in the direction of slowing the market. Couple this with the possibility of rising interest rates in the summer and I think we will see prices start to fall slightly by Fall. It will be interesting to see if Rennie agrees. Even if he does I do not expect him to lay it out the way I have.

AndrewJ said...

The question I have is did the low interest rates permanently save real estate or just buy us another few years. In fact my personal opinion is that it is just making for a greater fall later. The whole necessity of downturns is to remove excesses and unwind bubbles which we didn't.

Also note that fundamentals like supply and demand get distorted by a bubble. In fact in previous bubbles supply was constrained at the very top because of greed. Why would you sell when you were making so much money? So ultimately the question of whether this is a bubble or not is more important than previously useful fundamentals.

I have yet to see a truly compelling bull argument that this is business as usual. On the bear side I think that the following are very compelling:

- median house/median income = 9.3
- rapidly increasing debt during a recession
- supply overhang

What are the bull equivalents of those kinds of arguments backed up by statistics?

In the end I think Rennie either got very lucky or he is well connected enough to know what the government was prepared to do to support current house prices.

jesse said...

"The question I have is did the low interest rates permanently save real estate or just buy us another few years."

If interest rates stay this low for a long time, it means there is prolonged economic malaise: private investment is lacking. Lower interest rates have an effect on affordability for a large portion of the population whose wages will track inflation, such as those in, or closely tied to, the public sector. However, overall, current interest rates are borderline deflationary. This means there must be a reckoning eventually.

I think some will disagree with me but I believe permanently low interest rates cannot permanently save property prices. A move to permanently lower yields on an asset whose income is inflation-adjusted and risk profile hasn't changed doesn't make sense to me.