Housing in Toronto, no bubble.

The Toronto Star is not generally admired for it’s business section, which, by the way, is often combined with the sports section. That tells you where the priorities are. Nevertheless, if you happen to live in the country this is the only paper available, and, on occasions they do come up with some real gems. Craig Desson’s contribution today is one of those gems. For 3 or 4 homes he went back to the 1915 (precisely a century ago!) offerings, compared those with what the Bank of Canada thinks is the inflation adjusted value today, and then compares that with the most recent sale price for that property. Here are two examples;

housing in TorontoHousing in Toronto 2

Assuming the math is correct houses went up in price, on average for these two, 20.52X as the result of inflation. Put in other words, you have lost a little more than 90% of the value of your money in 100 years. But, over and above that, houses are now 8X more valuable than they should be on an inflation adjusted basis alone.

It should be patently clear from these numbers that there is no reason whatsoever to think that there might be a bubble in Toronto!