TORONTO - TD Bank is upgrading its expectations for home sales and prices this year because of continued low interest rates and the increased demand seen across most markets.
The bank says it now expects home prices to rise an average of five to six per cent for the rest of 2014.
In February, the bank had predicted home sales would flatten out, and that the market was about 10 per cent overvalued. It did not give an estimate on how much prices would rise or drop.
TD says its earlier forecast was based on the belief that mortgage rates would creep up this spring, but rates still sit near record lows.
Despite its new forecast, TD said in the long term the real estate market is still expected cool.
TD economist Diana Petramala says a rise in interest rates, reduced affordability and an increased number of available homes will "tip the market."