Watch this interview with economist Will Dunning where the discussion focuses on the question whether the hot real estate market in many parts of Canada is a "housing bubble".
According to this economist a bubble has several prominent features including: - Rapidly rising house prices - Significant growth of mortgage debt on the part of home owners - Many buyers adopting a speculative approach to house buying - Risky lending practices coming from banks and sources of mortgages. According to Dunning the current situation does have the first two characteristics, but does not have the second two. Most home buyers continue to be fairly cautious, while the banks and mortage lenders are equally cautious. Therefore he concludes the current situation is not a "bubble-like" one.
Why should we care about this? Dunning advises that we not be overly concerned about the current hot market because it is is caused by a healthy job market. It is people with good jobs who are driving up prices. Furthermore we are seeing a significant shift where many renters in larger Canadian cities are making the move to owning their home rather than renting.
In many smaller communities there has traditionally been a larger percentage of people owning their own homes. In both cases (larger and smaller cities) the news is all good. Circumstances make it a good time to purchase a house in the Toronto, GTA, Scarborough, North York, East York area. The economy is expanding, interest rates are still relatively low, and house prices are likely to steadily appreciate well into the future. Canada house prices, housing bubble, rising prices, hot market