(Source: National Post)

The Canadian housing market may look like a bubble, but low interest rates, a relative shortage of new supply and mortgage innovation should keep it going for some time to come.

Instead of looking at affordability calculations or house prices on their own, it is far more telling to see how the value of housing assets compares to various benchmarks. Economists at Scotia Capital suggests a price-to-earnings proxy that involves comparing prices to rent, where rent is the equivalent income stream to housing as corporate earnings are to equities. This compares the choice of owning versus renting.

Read Jonathan Ratner’s full article “Is Canada in a housing bubble?” in the National Post (November 16, 2009).

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