“Lower mortgage rates have enabled Canada’s key housing markets to defy gravity for the past few years. But with prices rising dangerously high relative to household incomes, there is the potential for a large correction down the road,” said Madani, in a note out Tuesday.

“The Vancouver and Toronto housing markets appear to be enjoying a revival of late, in contrast to most other markets in Canada. But with labour market conditions set to deteriorate this year and market bond yields expected to climb over the longer-term, they won’t defy gravity for much longer.”

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