Concerns about a housing bubble are on the rise
Are you thinking about buying a home? In February sales activity jumped almost 40 per cent compared to a year earlier. The national average price surged by 25 per cent year-over-year. New listings rebounded month-over-month in February, but inventories remain at record lows.
Are you thinking about buying?
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What do some market watchers think?
The Bank of Canada has expressed concerns about overheating. “What we get worried about is when we start to see extrapolative expectations, when we start to see people expecting the kind of unsustainable price rises we’ve seen recently go on indefinitely, and they’re basing their decision on those kind of assumptions,” (Tiff Macklem Governor of Bank of Canada).
“I think part of it is demand that built up as a result of regulatory changes in the years leading up to COVID that is playing out now. Part of it is demand that is being forward from the future either in search of a home base to ride out the pandemic, or to lock down a purchase amid rapidly rising prices while securing a record low mortgage rate,” said Shaun Cathcard, CREA’s Senior Economist.
Tsuriel Somerville, a professor of urban economics at the University of British Columbia, believes demographic factors could be pushing the market. He also believes COVID-19 may have accelerated some transactions that would have happened anyway, but over a more extended period. Somerville says millennials – who are said to be happy with renting and living in a sharing economy – will eventually get into the ownership market when their demographics dictate.
Original Article – First National Financial