A new report by TD Economics today emphasizes that not all housing markets across Canada are equal, with TD concerned more about some areas than others.
While they stand behind their assessment that the Canadian resale housing market is overvalued by roughly 10-15%, the risk is concentrated in certain municipalities. Housing in Ontario and British Columbia top TD’s concerns, specifically in Toronto and Vancouver.
Other regional markets like Calgary, Edmonton and Halifax have not seen this same build up in prices. In turn, less of an adjustment is required to return to more balanced territory.
Taking a page out of BMO’s earlier forecast, they state:
To bring it back to concept of a housing bubble, we do not believe that one exists in the Canadian housing market. Instead, we use the analogy of an over-inflated balloon, and higher interest rates will be the impetus for air to be slowly let out from the vessel. More generally and as we pointed out in a recent perspective by our Chief Economist, Craig Alexander, the balloon could get larger from now until mid‑2013, which heightens the risk of a steeper and more severe housing market correction down the road
For Alberta, TD forecasts that average prices will rise +1.1% in 2012, before falling -2.7% in 2013.
You can read the entire report here