Dive Brief:

• Rating agency Fitch has joined the World Bank and the Organization for Economic Cooperation and Development in finding Canadian housing prices to be about 20% over reasonable values. 
• Prices have been rising at about 4.5% year-over-year throughout the nation overall, though the exact level of increase varies widely between geographic regions. 
• Randall Bartlett, who is a senior economist at TD Bank, said he thinks the Canadian market is beginning to cool a bit after a spring run-up, but Fitch argues that the problem is that borrowers are stretching themselves so thin that they are vulnerable to shocks like interest-rate increases.  

Dive Insight:

The Canadian government tightened mortgage rules and reduced amortization periods to make borrowing harder, but Fitch was not convinced these measures go far enough. The market still could be toppled by events such as increases in unemployment, the ratings company said. The Calgary market was 8.1% above its June 2013 level, Toronto was 6.1% higher, Quebec City was down 2.4% and the Ottawa area fell 1.7%.

Most analysts believe that the housing market will have a "soft landing" after rates go up later in the year.