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Real estate signs in Calgary, Alta., on June 26, 2014.

Jeff McIntosh/The Globe and Mail

Canada's housing market is shifting into two distinct camps – one that is headed for a so-called soft landing, and another that remains heated.

On Wednesday the Bank of Canada said the country's housing market continues to pick up momentum at an unexpected pace. Sales of existing homes have hit a four-year high, according to the central bank's monetary policy report for October, pushing house prices higher.

But this reflects the country as a whole and masks "important regional divergences," the report noted. The "historically low price increases and sales volumes" in Eastern Canada indicate a soft landing may be on the way in those markets.

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But on the opposite end of the spectrum, major cities in Ontario, Alberta, and British Columbia remain heated, and the central bank raised warning flags. The bank does not explicitly name the cities in question, but the country's real estate hot spots are Toronto, Calgary and Vancouver.

"While a good part of the strength can be explained by favourable demographics and strong employment gains in parts of the country, it nonetheless suggests that household imbalances could increase further," the Bank of Canada's report said. It also noted record-high car sales, saying that "the strength in both housing and consumption has led to an uptick in the growth of household credit."

While the report highlighted the Bank of Canada's concern about the country's hottest housing markets, experts argued it does not mean it is predicting a real estate crash in Toronto, Calgary and Vancouver.

The housing market is considered balanced when buyers snap up between 40 per cent and 60 per cent of home listings, said Randall Bartlett, a senior economist at Toronto-Dominion Bank. Toronto, Calgary and Vancouver all climbed over the 60-per-cent mark this summer, creating an imbalance in those areas. Mr. Bartlett noted that this was the first time the Bank of Canada had flagged all three markets at the same time.

The imbalance on the hot end, however, is not so tilted that rising interest rates would result in a housing crash, he said. "They are not far out of balanced territory. So, while they are hotter than other urban areas, they are not so far out of whack that necessarily you'd see a housing collapse in those areas," Mr. Bartlett said. "The markets are getting even hotter, but it is not as if the sky is falling."

Ray Harris, president of the Vancouver Real Estate Board, believes government number-crunchers are overreacting to his city's housing statistics.

Vancouver's so-called home price index, which the board says represents the price of a typical property, was $605,000 in January, 2012. The index now pegs homes at $633,500, Mr. Harris said. The difference, about 4.7 per cent, is roughly in line with inflation, Mr. Harris argued.

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"It doesn't have that boom and bust," he said. "That does not sound like the market they are describing."

Economists, Mr. Harris believes, fret more when they compare current home prices to Vancouver's home price index for January, 2013, which dropped to $588,100.

The Bank of Canada's take on the national housing market is in line with the federal government's interpretation. Federal Finance Minister Joe Oliver has not predicted a housing bubble, but he has remained cautious about the market.

After a meeting with private-sector economists in Toronto last week, Mr. Oliver said there was a "dual market" in Canada. "Toronto, Vancouver, Calgary have seen price increases that the rest of the country have not," he said in a press conference. "This is something that we are, of course, monitoring. We take this issue seriously."

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