Global Housing Bubble – Based on Ratio of Price to Rent, Which Countries are the Bubbliest?

. Moreover, 50% isn’t even harsh at ground level when you have seen prices go much more than double in a few years.”

In Canada, the bubbles are where the most people live.

The US is misleading because some markets are hugely overvalued while others are approaching reasonable valuations. Florida has without a doubt crashed and in vast sections of sparsely populated Midwest farmland, the bubble never expanded much in the first place.

Thus, averaging out the US (or Canada) is not is not the best way of looking at things.

Addendum:

Mike in Toyko writes

Hi Mish,

Love the blog.

We bought a beautiful house in Tokyo in 2005 directly from the original owner. He had paid $3.5 million dollars for the house when it was new during the peak of the so-called bubble economy in 1989. We bought it from him at the fire sale distressed price of $800,000.

Because we bought it directly from the original owner, we didn’t have to pay any sales tax and saved 5% right there.

Well, that’s been 5 years ago. This is a fairly posh neighborhood and next door, two dinky brand new homes were built a over year ago that were on the market for about $1.6 million dollars… They didn’t sell at all. In fact, I never really saw any people coming to look at them at all.

Yes, Tokyo is expensive, but would you pay $1.6 million dollars for a two-bedrrom house that has no yard or garden and the floor- space is about as big as a typical American two-car garage?

Finally, I heard the real estate company and builders just wanted to get rid of these lots as they continually cost money to keep them “new” and they sold the houses for about $700,000 each.

Maybe Tokyo or Japan’s housing prices are 30-some percent undervalued, but you wouldn’t guess it by the lack of new home construction and the “For Sale” signs that sit in front of these homes for over a year…

Best,

Mike in Tokyo

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
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