A Final Thought About The Potential Housing Bubble

In discussing the recent report which led to a minor frenzy of housing bubble related media coverage, one of my main points was that it was unwise to predict countrywide drops in housing prices for a country with some pretty important differences from one region or city to another. Specifically, the data I presented showed that the current level in housing affordability in most regions was close to or less than long-term averages. Only Vancouver and Montreal were particularly unaffordable.
This idea was echoed by Don Campbell, President of the Real Estate Investment Network, who made some interesting comments:
-Million dollar sales in Canada’s biggest cities (Vancouver and Toronto) bring up the national average
-Certain regions are poised for an increase in the housing market
-Canadian mortgages are backed by the CMHC, making it much less likely for people to abandon their homes en masse
Campbell’s second point can be seen in the data I posted yesterday. He specifically mentioned that Edmonton and Calgary were due for a housing price increase and the data shows that housing affordability in both cities are below their long-term averages.
Ultimately, housing prices will not continue to rise at their current pace once the Bank of Canada begins an inevitable set of interest hikes in the next 4-8 months. But that certainly doesn’t mean that a massive sell off of housing is inevitable as well.