All this talk about Evergrande RE in China got me thinking. I read that Chineese house hold wealth is 70% into Real Estate. I am not a big fan of Canadian residential real estate bubble … Actually global RE bubble.

I read that in the USA, 26% of household net worth is attached to real estate.

In Canada I found the chart below which indicates Canada is closer too 52% (as of Q1 2022).

13.5 trillion house hold wealth (HHW) which includes 7.1 trillion real estate holdings = 52%.

In order to match up to the more normal and current USA ratio, RE holdings will have to lose 70% of their value, assuming all other factors remain unchanged.

I come up with this number based on the fact that as RE values drop so will house hold wealth drop equally, as RE is a component.

The new ratio would be 8.6 trillion House hold wealth (=13.5-4.9) and RE value of 2.2 trillion (=7.1-4.9).

2.2 RE of 8.6 HHW  is roughly 26%

A drop from 7.1 tril to 2.2 tril is a 70% fall.

Not forecasting this outcome, but I am alerting all to be aware of the risks. This could be the bubble bath that people drown in  🙂 !!

The IMF just declared Canada and Germany, the two biggest RE bubbles in the world.

They also declared the world is in a massive R bubble.

Cheers

The Canadian Property Bubble Inflation Is Now 75% of Net-Worth Growth