Last week, the Bank of Canada dismissed the notion that Canada is heading into real estate bubble territory. The bank believes that increasing interest rates at this time will only serve to cool the real estate market just as Canada is coming out of the recession. A cooling real estate market could potentially mean that economic growth in general would be slower to rebound.
One of the main reasons that the bank wants to hold off on raising interest rates is that they understand that the current factors driving the market – namely low interest rates and high demand – are only temporary.
Real estate bubbles tend to be easier to pinpoint in hindsight, so even if we were in one right now, we might not know it.
