The New York Times – “Some See a Real Estate Bubble Forming in Canada”

‘Some See a Real Estate Bubble Forming in Canada’, Ian Austen, NYT, 19 Mar 2010

Excerpts –

Some Canadians are concerned about the prospect of a price bubble. The Canadian Real Estate Association reported that the average price of existing homes rose 19.6 percent in January compared with those in the month a year earlier, the latest in a string of substantial gains dating back through last autumn.

Such drastic percentage gains are not just a reflection of the market’s earlier depths. In some Canadian cities, particularly Toronto and Vancouver, prices appear to be heading toward record levels.

“It’s no surprise the housing market responded to low interest rates,” said Craig Alexander, the deputy chief economist of the Toronto-Dominion Bank. “The real question is what’s going to happen in the next year. It can’t continue at the current pace, otherwise a bubble will form.”

“Canadians in the financial and real estate sectors feel a little bit smarter than they should about the strength of the economy and industry over the last few years,” said Phil Soper, the president and chief executive of Brookfield Real Estate Services of Toronto. “Certainly the underlying economy isn’t strong enough to support the prices we’ve seen over the last few weeks.”

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