Why the sky still isn’t falling on Canada’s real estate market

Joe Chidley: The biggest threat to the housing market isn\'t an interest rate increase. It\'s a good old-fashioned recession C and, technically, thanks to last quarter\'s negative GDP growth, we\'re already halfway there.

American economist Paul Samuelson back in 1966 famously said of the predictive power of stock markets that \”Wall Street has correctly predicted nine out of the last five recessions.\” Nowadays, you could say much the same thing, in a different way, about the Canadian housing market.

At $1.11 million, Toronto\’s detached home is climbing further from reach

As the Toronto market continues to blaze, nowhere could it be hotter compared to the detached home category. In the city proper, the average sale price was $1.1 million, 18.2 percent higher than last year

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Media and some economists happen to be dutifully predicting an accident in house prices each year since a minimum of since 2010. Yet each year, the market is constantly on the go up, seemingly defying gravity.

In Toronto, we\’ve all heard stories of termite-ridden shacks selling for $200,000 above asking. Bidding wars would be the norm. Nobody asks for an inspection before signing on the bottom line. Those of us old enough to remember the last Toronto housing crash, in 1989, find it all eerily familiar.

Certainly, those who think the end is nigh is going to be heartened by the recent surge in home prices.

The Toronto Real Estate Board on Wednesday released data that showed home sales in the Greater Toronto Area rose 6.3 per cent in May from the year earlier, and also the average home price rose 11 percent to nearly $650,000. In the city of Toronto, detached homes were selling to have an average of $1.A million, representing an 18-per-cent increase from a year earlier.

Similar stories are playing out across the country. Nationally, the Canadian Property Association reports that resale home values rose by 9.5 percent in the Twelve months to April 2015.

Vancouver, the country\’s priciest spot to buy a home, continues on a tear, and also the B.C. Real Estate Association said demand for housing within the province may be the highest since 2007.