I beg to differ, in Toronto and Vancouver which have historically for the past decade if not last two have been some of the hottest housing markets in the world. Without the speculative money from China coming into the Vancouver market it’s seen a decline of sales to the lowest since 1986 which was the beginning of the last Canadian housing bust cycle. Toronto is in a similar situation posting the biggest slowdown in a decade. When the speculative funds and austerity measures cease we’ll see a nice correction to mean value similar to when the egregious equity buyback programs stop. They’ll push it to the absolute limit similar to what they did with subprime mortgages, subprime auto loans, etc. but there is an inevitable tipping point here and helicopter money only goes so far.

I’m in your camp though, currently can’t fathom the catalyst outside of a full-blown housing collapse or debt crisis here in Canada where household debt to annual income has hit unprecedented levels … like 200-300%. The air from one bubble like Toronto or Vancouver has been leaking into the surrounding areas i.e. Victoria and Hamilton, bluer collar areas without the same labour market that’s pricing out local buyers. Lending is tightening, liquidity is contracting, and buyers are having to sit on the sidelines. I know this because there have been numerous developments in my area but not a lot if any sales of those units. Houses that were seeing bidding wars are sitting on the market for months at a time and taking low-ball offers. My aunt has been trying to offload her second property for roughly a year now. No buyers. Feels like the US real estate crisis all over again, just not as many delinquencies yet.

Where I live, prices have surpassed the 2007 highs and the market seems relentless. In some segments home prices have doubled and speculation and flipping has returned in force for the small town I live in. I do live in a second home resort type market where the driver of prices tends to be outside the local economy, however the local buyer is being priced out due to this also. I wonder if the lack of home sales across the country has to do with a lack of inventory? Therefore, driving prices ever higher, with more competition. As there is a real lack of inventory in this market, which is rather small.

I agree though that prices cant keep going up forever in homes as affordability will be a real issue without significant pay increases and one would think equity markets would also need a reset.

I do agree that locally and nation wide all assets seem frothy, however nothing seems to dent any market, housing or equity in this day and age, with the FED stopping the reduction of the balance sheet and rate hikes. I just wonder what the catalyst is going to be, like many folks.

I appreciate your work!