TD Economics released their regional housing market report today which focused on how different ratios point to varying degrees of overvaluation in Canadian real estate.
- Canadian home prices are “likely roughly 10% overvalued”
- The home price-to-rent ratio points to an overvaluation of 60%. However, this measure is skewed by rent controls.
- The existing home price-to-income ratio points to an overvaluation of as high as 30% but the overvaluation depends on the definition of income
- Overvaluation in Toronto, Vancouver, Montreal and Ottawa is likely more significant than that found in markets in the Prairies
- A lack of supply of listings on the market appears to actually be an issue for the housing market – and is one reason home prices have recently held up so well
- Calgary home sales are forecast to increase 5.8% in 2014 and 2.1% (highest in Canada) in 2015
- Calgary average prices are predicted to rise 3.5% in 2014 and 1.2% in 2015
You can download the entire report here
It’s interesting to note that back in 2011, TD was also calling for a 10% correction in the Canadian real estate market…and we know what has transpired in the years since.