Is there a Canadian housing bubble?: Scotiabank

Scotiabankeconomists Derek Holt and Karen Cordes address the housing bubble question examining Canadian valuations using a number of measures. They find prices to be “rich by any measure,” but conclude that they may go higher before they come down.

"Canadian house prices are rich no matter how one looks at it, but they are likely to become richer yet before material risks emerge later next year and beyond. The implications for the Canadian economy, mortgage markets, and monetary policy must, however, take full consideration of profound microeconomic differences between the Canadian and US mortgage markets. We also argue that the implications of strong house price gains on the Bank of Canada’s conditional commitment to keep rates on hold until the end of 2010Q2 are exaggerated for seven key reasons."

Read the full report here.

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