Research Firm Predicts 25% Drop in Canadian Housing Prices

A report by Capital Economics, suggests that house prices in Canada could fall by 25% over the next three years.
The report points to some specific concerns for their worrying prediction:
-Housing prices relative to disposable income are 25% overvalued
-Unoccupied housing units are at historical highs
-The homeownership rate has increased sharply over the last decade
The report places the blame on increased financial leverage in Canada, beginning with looser mortgage rules and continuing with historically low Canadian mortgage rates.
Tomorrow we will attempt to test the validity of these big claims by looking at some measures of housing affordability.