Is the real estate bubble about to burst? A new study from UBC's Sauder School of Business predicts home values in many Canadian cities are about to plunge. This comes on the heels of a report last week which indicated home sales in B.C. were already in decline.
The report says homes in most urban centres except Toronto and Edmonton are overvalued. However, Vancouver is not the most overpriced according to the study, with the Vancouver market being 11% overpriced. Winnipeg, Regina, Montreal and Ottawa are priced up to 25% higher than they should be to balance with rents--given interest rates, holding costs and historical rates of price appreciation.
Study author Tsur Somerville says the decade-long boom in Canadian markets is over and homeowners should brace for anything from a rapid price drop to a long, flat market. He also says the effect will be most pronounced in cities that have a large supply of unsold inventory, such as Vancouver.
