According to a new study from Deutsche Bank, Canadian homes are overvalued by 60%. According to a CBC article, some Canadian economist feel this is accurate. When we look at areas like Toronto or Vancouver we can understand what they are saying because the cost of homes are simply out of reach for most Canadians.
Fortunately, most of us don’t live in these major cities. Beautiful places like Kingston, Ontario saw an average selling price in November 2013 of $289,977. This is up six per cent from November 2012.
Some are saying there are no bubbles in the Toronto market but we do see corrections in the market. The graph below certainly makes you nervous!
Buyers should be cautious in purchasing homes where the potential for a correction is likely. If you do need to buy now, you should be in for the long haul. If you have to sell when they market drops, the potential to lose equity you have built up in your home is likely.
Source: Adapted from CMHC, Housing Now – Canada Edition, December 2013.