The Globe and Mail reports in its Saturday edition that the market forces driving home prices higher will not disappear overnight -- even when the pandemic subsides. The Globe's Ian McGugan writes that for the last 10 years home prices have marched relentlessly higher. The latest surge -- a 10.8-per-cent jump over the past year to March -- extends a long saga of persistent gains in the face of unrelenting skepticism that the rally will last. The Globe says Canada's real estate market looks less bubble-like than exuberant. Capital Economics economist Stephen Brown says the recent gains in home prices, at least until January, were largely a mechanical response to falling interest rates and tight supply. He says: "The message from the Bank of Canada has been that rates are going to be lower for longer. In that environment, housing should continue to do fairly well." Mr. McGugan notes that the BOC has done nothing to dispel the core message that low rates are going to be with us for a long time. He says so long as the economy remains fragile, policy makers and central bankers seem more likely to feed the real estate exuberance than restrain it. Mr. Brown expects the BOC to proceed cautiously in tightening policy.
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