Madani: Canadian Real Estate Overvalued

Building Permits Drop
But Madani said he does see trouble down the road — in late 2011 and 2012 — because Canadian home prices are substantially overvalued. He predicts as much as a 25 per cent drop in home prices in the coming years. As soon as prices drop, he said, construction activity follows because builders want to avoid a glut of unoccupied homes on the market. "We're of the opinion that we've simply built too many homes," Madani said.The housing market has been slowing in many parts of Canada and in some cities. An overbuilt condominium sector — especially in big cities like Toronto and Vancouver — has also started to weigh down the market.