According to The Economist:
Overvaluation is especially marked in Canada, particularly with respect to rents (78%) but also in relation to income (34%). Mark Carney, the country’s central-bank governor, who is soon to jump ship to join the Bank of England, where he takes over from Sir Mervyn King in July, may have shown good market timing with his move to London as well as a deft hand in negotiating his lavish remuneration.
From Global Toronto: “Bankers expect Canadian housing marketfaces a soft landing despite slowdown”
"Our expectation is that the overall real estate market in Canada is still relatively solid," Royal Bank (TSX:RY) CEO Gord Nixon said Tuesday.
Despite reports that suggest Canadian housing is in crisis, he said the pullback is limited to a couple of markets, notably Vancouver.
"We have seen a slowdown in sales and we've certainly seen a slowdown in mortgage demand but price levels are relatively stable," he said, adding that other than debt to disposable income, most indicators are in line with historic standards.
"So our expectation is we've got this sort of soft landing scenario on the real estate side."
Reuters reports : “Mild correction seen for Canada housingin 2013: Royal LePage”
Dismissing fears of a sharp collapse in Canada's long-hot housing sector, Royal LePage Real Estate said resource-rich cities in Alberta and Saskatchewan will have strong growth in sales and prices, dampening the impact of an expected slowdown in previously booming cities like Toronto and Vancouver.
"A helpful comparison is to reflect on the beginning of 2009 when the country was in the grips of a very grim global recession," Phil Soper, president and chief executive of Royal LePage, said in the group's quarterly outlook.
"Price appreciation in Canada ground to a halt, but home values dropped only slightly. With economic fundamentals such as employment levels improving, we expect this cyclical correction to be short-lived."
From BMO’s: CanadianHousing Outlook for 2013
"Home sales and housing starts will continue to moderate and prices will generally stabilize in most regions in 2013," noted Mr. Guatieri. "In the year ahead, the housing market will be supported by moderate job growth, steady immigration, growing demand from echo boomers entering their prime first-time home buying years, and a gradual shift toward more single-person households."
He added that the real estate market will benefit from continued low interest rates with the Bank of Canada likely on hold for another year and the U.S. Federal Reserve's quantitative easing keeping a lid on longer-term mortgage rates.
Mr. Guatieri also noted that Alberta - particularly Calgary - and Saskatchewan could buck the national trend and see higher prices due to continued healthy economic growth and wage increases. Meanwhile, pricier Toronto and Vancouver are likely to have a bumpier landing than most other regions, with prices declining moderately.
Are we going to see a 78% drop in real estate prices in Canada? Almost certainly not! A 34% drop in prices in Vancouver and Toronto Condo market however, that’s quite possible. Heck, even BMO and LePage admit that a bumpy ride is ahead for Toronto and Vancouver. I admit that Flaherty and Carney might be successful in an engineering a soft landing for most of Canada, yet I think that both Vancouver and Toronto will crash hard. What do you think?