The Economist magazine has been saying for years that Canadian houses are overvalued. Its latest outlook offers the largest estimate yet: Houses in Canada, it says, are about 40 per cent too pricey, relative to “fair value,” or what people can afford.
But this time, the magazine’s latest global housing outlook offers an explanation for why Toronto and Vancouver, in particular, have seen runaway house price growth in recent years, while other Canadian markets have stagnated or even seen falling prices.
“Globalization has created a handful of metropolises that attract people, capital and ideas from all over the world, almost irrespective of how their national economy is doing,” The Economist writes. “House prices in such places, unsurprisingly, outpace the national average.”