Zoocasa
Sold Prices
Map
Market Insights
  • Blog Home
  • For Buyers
  • For Sellers
  • Real Estate News
  • Mortgage News in Canada
  • Free Guides (PDF)
  • Real Estate Infographics
Zoocasa
  • Blog Home
  • For Buyers
  • For Sellers
  • Real Estate News
  • Mortgage News in Canada
  • Free Guides (PDF)
  • Real Estate Infographics
Home Real Estate News

Does Canada Really Have a Housing Market Bubble?

Pira Kumarasamy by Pira Kumarasamy
March 8, 2017
in Real Estate News, Toronto Real Estate, Vancouver Real Estate
Reading Time: 3 mins read
Housing Market Bubble
Share13
Tweet
Share
13 Shares

Rising prices in the Toronto and Vancouver real estate markets have led many to question whether or not Canada is experiencing a ‘housing bubble’. There are experts on either side of the argument, and most recently some of the big banks have asserted that we are indeed in a bubble. With so many factors driving up housing prices, one must be vigilant when using a term like ‘bubble’ – as every bubble must eventually pop.

Below, we look at what a bubble actually is and why we may – or may not be – in a bubble.

What is a Bubble?

At its core, a bubble occurs when a commodity has run up in price simply because it has kept running up in price. In other words, the price increase is purely speculative with no market fundamentals to support the change. In the case of the housing market, prices have increased 40% over the past five years with no economic reason to back up the dramatic increase, according to some.

We Could Be in a Bubble…

Those that argue that a bubble exists believe there is little evidence of a supply shortage – the reason many have cited for the sharp increase in prices. Toronto’s population growth is also the slowest it has been in 40 years, again refuting evidence that prices are a simple supply and demand issue. Bubble believers also point to the fact that condominiums are also seeing high price gains, with an abundance of supply. If supply is stable and demand is showing no dramatic increase, there must be another reason for the increase. Many point to the influence of speculative foreign buyers – further supporting the bubble argument.

… But We May Not Be

There are many that believe there is no bubble and that the housing market is working exactly as it should. Most notably, Toronto Mayor John Tory believes the rise in prices shows the market is healthy. A recent survey from the Toronto Real Estate Board (TREB) also found that listing supply in December 2016 is the lowest it has been in the last 15 years. Those that refute the bubble are inclined to believe that the idea was created as a way to induce panic. The definition of a bubble is a specific one, and points to the argument that price increases rise for no other reason than speculation. It’s a narrow theory and doesn’t consider external factors like a low interest rate environment and economic booms in large cities like Toronto.
After all, Vancouver and Toronto real estate markets are desirable, so is it really so far fetched to believe that prices are rising at a rapid pace?

The Verdict

All things considered, there is no denying that home prices have increased at an alarming rate over the past several years, leaving home ownership out of reach for many. The reason however, is not so clear. The story in Canada is too nuanced to conclude that we’re in a bubble – or that we are not. Only time will tell which school of thought will win out.

Do you think Canada’s housing market is in a bubble? Share your thoughts in the comments, or visit us on Facebook and Twitter!

Previous Post

How to Sell Your Home During a Divorce

Next Post

Monthly Real Estate News Recap: February

Pira Kumarasamy

Pira Kumarasamy

Related Posts

brunch table with different entrees
Alberta

You Can’t Eat Your Way Out of the Housing Crisis

June 23, 2025
Dad and daughter walking dog
Canada

Canadian Cities With the Sharpest Home Price Declines in Spring 2025

June 16, 2025
CN tower at sunset
Canada

Buyer Conditions Persist as Listings Surge in May: TRREB

June 4, 2025

Blog Search

No Result
View All Result

Newsletter Sign-up

Join a community of 130,000+ subscribers. Don't miss important real estate news, market data, and buying and selling tips.

Recent Articles

brunch table with different entrees

You Can’t Eat Your Way Out of the Housing Crisis

June 23, 2025

10 Cheapest Homes For Sale in Florida: Where to Find Budget-Friendly Options in the Sunshine State

June 22, 2025
Attendees relax on the grass at a vibrant music festival, engaging with friends and enjoying the lively atmosphere.

7 Summer Festivals That Might Just Help You Choose Your Next Canadian City

June 21, 2025
Interior view of a bathroom with a shower, sink, and toilet, showcasing a clean and modern design.

Everything Shower Spaces: The Wellness Upgrade Gen Z Buyers Want Now

June 20, 2025

Featured Listings

5 Canadian Cottage Regions That Make the Perfect U.S. Buyer Getaway 

June 15, 2025

From Skyline Views to Private Escapes: 5 Luxe Calgary Homes for Sale

June 10, 2025

What it Means When a Home is Listed for $1

June 7, 2025

6 Can’t-Miss Victorian Homes for Sale in San Francisco Right Now

June 2, 2025
first-time home buyer programs and rebates

Social Media

250 The Esplanade Suite 408 Toronto, ON M5A 4J5

Stay Connected

  • Blog Home
  • For Buyers
  • For Sellers
  • Real Estate News
  • Mortgage News in Canada
  • Free Guides (PDF)
  • Real Estate Infographics
No Result
View All Result

Zoocasa © 2007–2022. The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA.