Is our real estate market in trouble? The debate continues.
The Economist magazine recently argued that Canada’s housing market is overvalued by 24 per cent, when you look at ratios of the historic cost of renting versus buying.
Two Bank of Montreal economists disagree. In a recent report titled Canadian Housing: Pricey, Not Dicey, Earl Sweet and Sal Guatieri say the Economist’s projections are wrong.
The magazine used price-to-rent comparisons — rent prices supposedly reflect a home’s worth — but the BMO economists compared house prices to income and found that Canadian abodes were far less inflated - 11 per cent above historic norms.
Housing valuations were higher late last year, about 18 per cent overvalued, but thanks to a 3 per cent decline in prices this year and continued moderate growth income, the degree of overvaluation has declined.
November 08, 2010
By Bryan Borzykowski
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