The rumours of the great Canadian housing bubble are greatly exaggerated, according the Canadian Real Estate Association (CREA).
Housing prices across Canada have increased an average of 6.9% in the first 10 months of 2014 - the highest in a decade. The more accurate housing price index (HPI) has increased 5.2% during the same period, which is the best in three years. If you take Vancouver, Toronto and Calgary out of the picture, the average price increase would be several percentage points lower. Other market measures, like sales-to-listings ratios and month's supply of homes for sale, are close to their 10-year averages.
Housing market bubble stories fail to recognize fundamental housing market dynamics. For a big price correction to take place, we need a big and lasting run up in supply . . . or a big and lasting drop in demand . . . or some combination of the two. Since neither a recession or a big spike in interest rates is expected, it's unlikely to happen.
Average house price growth is being stretched by increasing average prices in two of Canada;s most active markets, Vancouver and Toronto. What's happening in Vancouver and Toronto reflects a couple of things - you've got some very high-priced homes making up a great proportion of the sales, pulling up the average price in those markets and for Canada as well.
For example, Toronto saw a 9% increase year over year in average home prices in October, versus 5.5% increase in HPI nationally. Those price increases are largely in central Toronto where condo construction has driven up the price of single detached homes. In Vancouver, there's a lot of expensive homes being sold and an ongoing shortage of affordable homes.
Buying a home is one of the biggest investments you will make in your lifetime, so it’s wise to take time and get the guidance of a professional to help ease stress and alleviate any financial and legal pitfalls that may arise from making an emotional decision. As a CENTURY 21 Dome Realty agent, I am trained to help you make an informed decision and give you peace of mind when buying or selling.
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