wolfstreet.com / by Wolf Richter /
Ratings agency Fitch, which is in the
business of slapping high-grade ratings on iffy bonds so that they can
be sold to conservative pension funds around the world, and which is not
in the business of considering entire asset classes overvalued,
nevertheless considers the Canadian housing market “20% overvalued in
real terms.”
And that in a world where nearly all asset
classes are overvalued! Natixis, the asset management and investment
banking division of Groupe BPCE, the second largest bank in France,
grappled with that issue and came out predicting the likelihood of
another financial panic [ What Happens When ‘All Assets Have Become Too Expensive?’].
But not in the Canadian housing market. To come up with the conclusion in its report,
Fitch didn’t look at an obvious chart, like the one below, or at other
obvious measures, but at its own “sustainable home price model, which
measures home prices relative to long-term fundamentals.” If it had
looked at the chart below, it wouldn’t have come up with 20% but with a
number closer to 100%.
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