http://www.zerohedge.com/article/guest-post-elusive-canadian-housing-bubble

This paper explores the subject of a possible housing bubble in Canada. It examines a diverse array of factors that may have contributed to the rise in house prices in Canada. The paper evaluates each factor individually and determines the health of the Canadian housing market using common valuation techniques.

The author leaves out several significant variables.

1 the long-term rise in the Canadian dollar
2 Canada's reputation as a safe haven (banking system is sound - rule of law applies)
3. International capital flows/capital flight, including money laundering

I'd argue that without the above factors, you can't build a true picture of Vancouver or Toronto, where most of the price appreciation is concentrated. How much of the demand is coming from outside the country, or from sources outside the country? On the affordability front, how many new buyers are underwritten by their families according to traditional patterns of overseas land ownership? For example, the asian population of Vancouver is significant - somewhere around 25%. Some of the money financing their (and their children's) purchases comes from areas where land prices are astronomical relative to Canada. In the case of capital flight or money laundering, protection, not profit, is the key factor, so none of the standard metrics need apply.

Not saying there isn't a bubble, but as Keynes pointed out, "The markets can remain irrational longer then you can stay solvent", and Canada's a pretty irrational place at times.

ebear