The Globe and Mail reports in its Thursday edition that Bank of Montreal economist Robert Kavcic believes that recent Ontario homebuyers are "playing with fire" where prices are concerned. The Globe's Scott Barlow quotes Mr. Kavcic saying: "From 2010 through 2016, it showed that Canada's housing market was doing just what it should be doing based on interest rate and income fundamentals, despite relentless bearish talk (which we steadfastly argued against). In 2016/17, it showed that non-resident investment was overheating a strong domestic market -- in some segments, the result was prices correcting and taking almost 4 years to recover after policymakers acted. Now, it suggests that the market might be playing with fire ... if mortgage rates were to reset to pre-COVID levels, we're back into late-1980s territory by this valuation metric. Alternatively, if mortgage rates stay where they are, but prices keep doing what they're doing, we're back into late-1980s territory by this time next year."
© 2021 Canjex Publishing Ltd. All rights reserved.