It appears all the talk about a housing bubble might be overblown. Bank of Nova Scotia Chief Executive Office Brian Porter was recently quoted in the Globe and Mail saying, "Bubble is perhaps the most overused word since the global crisis". He goes on to add, "Canadian consumers have a conservative attitude towards debt and their household balance sheet, including assets, is in very good shape".
Canada's employment rate has been improving noticeably lately. The unemployment rate plunged to its lowest in 6 years reaching 6.8% in September, followed by the addition of 74,000 new jobs across the country. Also interest rates are still low even though RBC does predict that the Bank of Canada will start increasing rates in the spring of 2015 which will certainly put pressure to raise mortgage interest rates.
With the increasing confidence of most Canadians along with low interest rate environment, it's no surprise that a lot of households are taking advantage of current market conditions by either paying down their mortgage or borrowing to consolidate more expensive debt like credit cards.
They are also using the money for investing or for home renovations. According to data compiled by the Bank of Montreal, more money was spent renovating homes in Canada than building new ones during the 12 month period ending in June.