I recently read a news article in a major Toronto newspaper about real-estate prices in Canada and how they're somewhat inflated and due for some correction. The article went on to give some rather bizarre and technical reasons for current high real-estate prices. When I read this I thought - you must be nuts - a classic case of over analysis and academic pontificating. Why are prices high? Just look at how many real-estate agents are out there churning the market. It's unbelievable, the number of agents and properties for sale. How can this many agents make a living unless the prices remain as high as possible in order to support the commissions paying these people. It's in the agents best interest to push prices as high as possible and to get as many properties listed as possible.
As population pressures continue it's possible that real-estate will continue to see inflationary price pressure. But let's not fool ourselves - if you've watched the market as I have you can only conclude that the prices are not sustainable. Artificial pressure from agents looking to keep the goose laying the golden eggs can only last so long.