People are often quick to assume that everything they read in print is true, especially when it comes to statistics. Take the Canadian home-buying market. A recent report by the Organization for Economic Cooperation and Development (OECD) promoted the idea that Canada’s housing market is in a “bubble” and that prices are over-valued by as much as 60 per cent by world standards. In a report entitled “How to Dissect a Housing Bubble,” noted housing industry economist Will Dunning has responded that OECD used seriously flawed house price-to-rent statistics in their study. He dismisses the housing bubble myth and the fear-mongering that has people thinking that Canada’s housing market is overvalued.

Dunning says that OECD relied on the Teranet/National Bank National Composite House Price Index and Consumer Price Index, which are in his words, “badly flawed” and resulted in “wildly inaccurate estimates.” He says that the Royal LePage House Price Survey is more accurate. In fact, he states that Canadian home prices may even be under-valued, which is something I have been saying for years. He adds that Canadians have been careful about mortgage spending, knowing full well that interest rates will eventually rise, and that the market can absorb the increase when it comes. To read Will Dunning’s entire report, which is fascinating, visit

chartTD Bank has also criticized the OECD study conclusions, forecasting that the market is perhaps overvalued by only 10 per cent. TD’s economist Diana Petramala argues that the OECD study was based on price-to-rent and price-to-income rations rather than housing affordability, and did not take into account the drop in interest rates over the past few years.

All in all, this teaches us that sometimes the “experts” can be wrong, and that reality is determined by the way people act. New home sales in the GTA remain solid, especially condominium sales. I’m with Will Dunning on bursting the housing bubble myth!