No 'Bubbly' Behavior in the Canadian Housing Market

A new Canadian economics report shows there is little reason to fear a housing bubble there.
August 13, 2005, 9am PDT | Michael Dudley
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"Canadian home prices rose by more than 8 per cent from a year ago in the second quarter, buoyed by a dip in mortgage rates that helped to improve affordability. (The average five-year chartered bank posted mortgage rate dropped by about 15 basis points to 6 per cent in the second quarter). At first glance, the current pace of home price appreciation might sound excessive to some and might raise concerns about a growing speculative bubble akin to the late 1980’s experience or the “frothy” condition south of the border...Since the most basic definition of a housing bubble is that prices are being bid up beyond what their underlying fundamentals would justify, then most regional housing markets in Canada would not qualify for 'bubble' status."

Thanks to Michael Dudley

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Published on Wednesday, July 27, 2005 in TD Economics
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