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Commentators, ordinary Canadians, and economists (us included) have been struggling to explain the parabolic rise in house prices, particularly in Canada’s two largest cities, Toronto and Vancouver. Explanations focusing on low interest rates, demand-supply imbalances, speculators, and foreign buyers go a long way in explaining the rise, but they all fly in the face of fundamental metrics such as house prices compared to disposable income, house prices compared to rents and some others that are all flashing red.
In our view, another culprit in the current house price inflation and affordability crisis has escaped most pundits’ notice, namely, the overall opacity of Canada’s residential real estate market. The blind-auction process, the lack of real-time sales data in the public domain and the poor transparency concerning fees to enter and exit real estate all clearly exacerbate the housing affordability crisis. A fully transparent residential real estate marke
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