The Canadian Real Estate Association (CREA) released data Wednesday showing that a total of 457,893 homes changed hands in Canada last year, an increase of about 0.8% from 2012's sales levels.
"Absent further mortgage rule changes, sales in 2014 may surpass the annual total for 2013 if demand holds steady near current levels as strengthening economic and better job growth offset the impact of further expected marginal mortgage interest rate increases," says CREA's chief economist Gregory Klump.
As has been the case for years now, CREA says the large jump in Canadian real estate prices was largely due to what was happening in Canada's most active and expensive markets - namely Vancouver and Toronto.
Canadian Real Estate Bubble to Burst?
Sales activity in December 2012 in Toronto and Vancouver was abnormally low, which dropped the national average during that time period, a sign that the growing bubble is ready to burst.
"Removing Greater Vancouver and Greater Toronto from national average price calculations cuts the year-over-year increase to 4.6 per cent," CREA said.
CREA says the average price can be misleading, as it can be too easily influenced by individual factors which drive prices up - factors like too much credit, high demand, etc.
The realtor group says its MLS Home Price Index "provides a better gauge of price trends because it is not affected by changes in the mix of sales activity the way that average price is."
That index shows home prices rose 4.31% over the past 12 months. Gains were seen in all housing types - including condos which is expected to cool sharply in 2014 - 2015.
The index was led by an 8.7% gain in Calgary and a 6.3 per cent gain in Toronto.
Vancouver's market index posted a second straight increase of 2.13% after declines for much of the time between late 2012 and late 2013.
The thing is, the higher those percentages go the bigger the bubble is then the bigger the problems will be when the prices crash.
Worried Bankers and Economists
Economists and policy-makers have been scrutinizing the Canadian housing market for indications of weakness and warning signs of a possible crash - something that is expected to happen sometime in the next two years.
"If you run a bank, you should be worried about it," says Ed Clark, the outspoken CEO of the Toronto-Dominion Bank.
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