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Though Pimco, the Deutsche Bank and Capital Economics have all suggested a big housing market correction is in the cards for Canada, the Conference Board of Canada isn’t buying it.

In their Housing Briefing for Winter 2014 report, the research organization says housing bubble fears are “overblown” and a soft landing is more likely. Here are a few quick points from the report:

Ratio re-check

The Board points out that many bubble concerns stem from ratios of house prices to apartment rents and incomes. Though they concede the ratios are high, the Conference Board of Canada writes that they’re actually misleading since the ratio of mortgage payments to rents to income is a better gauge and “less alarming.”

Moderate mortgage rate increases

If the Bank of Canada tightens up monetary policies by end of year, the posted five-year conventional mortgage rate could go up from its current rate of 5.24 to 5.9 per cent by the end of 2015. However, since this is a moderate and gradual boost, it should give homeowners time to adapt. And many homebuyers have extended mortgage terms which lock in their monthly payments and protect them from rate increases for a few years.

Overbuilding and population predictions

The country’s ratio of housing starts to absolute population changes has been near its 25-year average of 0.54 for the past three years. Over the past two decades, an average of 0.47 homes have been started per additional person in Canada. In the last three years, the ratio has been 0.46 and consistent with historical norms. Canadian cities with more than one million people have all had ratios consistent with these historical norms too.

Balanced resale market

The Conference Board’s Resale Market Monitor found balanced resale markets in 19 out of 28 major city markets. Only four cities –  Thunder Bay, Oshawa, Hamilton and St. Catharines – saw sellers’ market conditions.

What about all those Toronto condos?

Many industry experts have pointed to the spectre of condo oversupply in Canada’s largest city as a cause for concern. Ultimately, the organization thinks the market will cool while the average resale price slows. However, they don’t see a massive price drop on the horizon due to population and employment growth. Plus downtown condo living is a logical response to the region’s traffic and gridlock troubles.

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