Is it overheated or not? Depends on who you talk to. Even the economists aren't sure.
Economists who have been arguing that overeager home buyers in Toronto and Vancouver are inflating prices have found an unusual champion in one of the country's top real estate players.
Phil Soper, chief executive officer of Royal LePage, is warning of "irrationality" in the country's largest cities, an unusual admonishment from someone whose profession stands to gain from hot housing markets.
There is more enthusiasm for housing than seems reasonable given the underlying economy, Mr. Soper said in an interview yesterday. He also cautioned homeowners to brace for an extended period of stagnant house prices that could begin later this year.
Nationwide, the price of a standard two-storey house was 10.3 per cent higher in the first quarter of this year than a year ago, at $365,141, according to a survey that Royal LePage released yesterday.
But national averages are of little use, Mr. Soper pointed out. Prices rose 19.2 per cent in Vancouver and 13.2 per cent in Toronto. By contrast, prices for two-storey houses in Edmonton rose 5.2 per cent, and those in Halifax rose 6.8 per cent.
Housing prices continue to present a conundrum for federal policy makers. "The housing boom isn't really a national housing boom, it's very regional in its nature," Mr. Soper noted.
But neither Mr. Soper nor the majority of economists think there is a bubble in Canada. And they expect it won't be long before the market lets off steam, as rising prices and soon-to-rise interest rates curb affordability.
Banks have already begun raising mortgage rates, and Bank of Nova Scotia CEO Rick Waugh suggested in an interview that the shift will stick.
"It does reflect a more normal marketplace, and that will continue as these economic numbers continue to reinforce that things are growing," Mr. Waugh said.
Houses have been highly affordable for a number of years now but "that will change, and part of it will come quickly," Mr. Soper said.
On average, national house prices have appreciated by about 2.4 per cent annually over the past 50 years, Mr. Soper said. But by the end of this year he expects a minor slump to begin during which price growth remains below normal. He is not, however, forecasting an actual decrease in prices.
