Are We In The Midst of A Housing Bubble?

The “Housing Bubble” is often mentioned these days as quickly rising home prices fuelled by demand and speculation is causing some people to feat that this will lead to a collapse. So are we in a housing bubble? Is now the time to sell my home? Should I wait to buy a home?

Evan Siddall, former CEO of Canada Mortgage and Housing Corporation (CMHC) suggests “if demand is going up and supply is not, prices will go up, that’s not a bubble. So it’s a question of what the future brings and whether there will be supply and demand coming back into balance and that’s a crystal ball question.” 

Although Toronto and Vancouver are globally ranked amongst the biggest bubbles in the world, they are not seen as being at the top of the Bank of Canada’s House Price Exuberance Indicator (HPEI) — that distinction falls to Montreal and Hamilton as they are showing an “explosive dynamic when home prices grow over what fundamentals support” according to Stephen Punwasi, Co-Founder and chief data nerd at Better Dwelling, named a top influencer in finance and risk by Thomson-Reuters. “Fundamentals include incomes, mortgage rates and population growth.”

A Royal Lepage Survey of agents across Canada taken in Fall 2021 suggests that now is a good time to consider selling rather than wait until spring, “as demand continues to outstrip supply”. The upward trend in prices is continuing because of strong demand, interest rates are still attractive and lending is encouraged by mortgage insurance. Average prices in November have edged up 20% to $1,611,000, while the number of sales has fallen 27.1% and the number of listings is down 61%. However, with inflation of 4.7%, there are continued reports of anticipated interest rate hikes in 2022.

If you are considering buying or selling a home and would like advice or more information, please contact me for a no-obligation consultation.

Call Lynne Blott at 416-540-7307 or e-mail at lynne@lynneblott.com