Toronto is the only North American real estate market considered in bubble territory. Toronto home prices are overvalued, making it high risk of being in a bubble, according to a new report on global real estate conditions by UBS Bank.

The bank ranked Toronto as No. 3 in its annual bubble index, following Munich and Frankfurt. Seven of the 25 global cities assessed were in the high-risk category. Hong Kong, Amsterdam and Paris were below Toronto.

The report defines a bubble as being a period of a substantial and sustained mispricing of homes. UBS real estate analyst, Jonathan Woloshin, said “there is a greater chance of price stagnation or price decline” in cities like Toronto. “Does that mean it will happen? NO. But the risk is certainly greater,” he said.

The UBS report stressed that it was not predicting when a bubble would burst. Overvaluation and undervaluation can go on for quite a long period of time. Toronto’s home prices have increased, “yet affordability is already stretched,” the report said.

The report looks at imbalances in real estate markets, including the relationship between home prices and household income. This is the fourth straight year that Toronto has been in the bank’s bubble zone, taking the top spot in 2017. Vancouver also made it to the No. 1 spot in 2016, but this year the UBS index did not classify the city as being in the highest risk zone.

The freehold market still seems to be looking for stable footing. We are witnessing a bit of everything, with some listings reducing their prices after a couple of weeks and some cancelling their listing and coming out with a new increase in their price, when they don’t get a bidding war on offer night.

After weeks of increased listings in the condo market, last week we saw a 12% dip in new listings. While sales tapered off 7% over the previous week, activity continues to be good with 34% of condos selling at or above the list price.