Concerned about a big drop in home prices? Quit worrying.

Canada’s housing market is more like a balloon than a bubble, maintains BMO Capital Markets in a recent report.

While bubbles always burst, a balloon often deflates slowly in the absence of a “pin”.

In most regions then, where valuations are just moderately high, the air should seep out slowly, as rising incomes catch up with higher prices, allowing valuations to normalize before interest rates do.

What would constitute a balloon-bursting pin? If interest rates were to spike by about four percentage points, for instance, the affordability of homes would quickly drop. Same with a severe recession.

A “good real estate investment” can mean different things to different people. But, when you're talking money at least, you're looking for a reasonable return on the money you put up.

What that means is that if you're going to put your cash (which includes your down payment and closing costs as well as reno expenses) into real estate, your net worth should improve by a greater amount than if you invested in a similarly risky asset, says Leonard Baron, author of Real Estate Ownership, Investment and Due Diligence 101 – A Smarter Way to Buy Real Estate.

And simply hoping that markets will go up and up doesn't always work out, he caustions.

For example, if your property rental income minus expenses produced $250 per month positive ($3,000 per year); and your invested cash equity was $50,000, that’s a cash on cash return of 6.00% ($3,000/$50,000) and you'd be doing pretty well.

A lack of apartment building construction combined with a glut of new condo construction has given birth to a new kind of landlord who buys one or two condo units and rents them out, the Ottawa Citizen reports.

While rents may barely cover mortgage, tax and other expenses in certain markets, the hope is that the rental income evens things off bit until the unit increases in value.

Fair enough, but are you sure you want to be the one paying the rent? First off,  rents for condominium apartments are anywhere from 30% to 40% more than traditional rental apartment buildings -- in the GTA, at least.

You’ll likely get a newer (albeit smaller) unit and, in many cities, you’ll have better access to the downtown core. But tenants who rent a unit in a condominium complex and are used to the standard leases of traditional apartment buildings, may be in for a few surprises.

It's not uncommon for many retirees to take out small loans against their home equity to fund renovations or even to make down payments on an additional property.

More and more, however, older homeowners are finding they need to squeeze a bit more income out of their house. That's leading to record number of reverse mortgages in Canada, according to a recent HomEquity Bank study.

Reverse mortgages are offered to Canadian homeowners 55 and older and have no income, credit or health hurdles to cross. As well, unlike traditional loans, borrowers don't have to service the interest or repay the principal for as long as they own their home and are still living in it.

Business seems to strong. HomEquity, the only national provider of reverse mortgages in Canada, says its reverse mortgage business was up 42% in the fourth quarter of 2011. On an annual basis, the company wrote $239 million in reverse mortgages, a 16% year-over-year jump that lifted its portfolio of reverse mortgages to $1.2 billion.

Canadian home prices are now showing many of the signs of a classic bubble, according to a recent report from Bank of America Merrill Lynch.

Factoring in record low mortgage rates, the housing market nationwide is at least 10% overvalued, say Merril economists. More importantly, under more normalized interest rates, home prices would actually look about 25% overvalued based on current prices, they estimate.

“In our view, the housing market is one of the most vulnerable sectors to this weakening economic environment, showing classic signs of over valuation, speculation and over supply,” says the report. “We are not calling for an all out rout in the market — but caution is now decidedly warranted.”

As housing prices continue to rise, more and more potential buyers are opting to rent, fueling a bit of a rental shortage in some urban centres. And then there's all those people who couldn't afford to buy a house no matter what.

One factor driving people to rent is an uncertain job market. Despite low mortgage rates, people are reluctant to get tied down in a mortgage if they don't know where they'll be working next.

To ease the squeeze on tenants facing maximum rent hikes of 3.1 per cent next year, residential rent increases would be capped at 2.5 per cent starting in 2013 under legislation proposed this week by the Ontario government.

Click here for a historical view of previous rent increase guidelines. The average from 2004 to 2011 was 1.89 per cent whereas it was 3.17 per cent from 1993 to 2003.

Not surprisingly, landlords are already starting to howl: “The government is unilaterally imposing a cap without any discussion with an entire industry and is initiating a policy that will be particularly devastating for small landlords," says Vince Brescia, president of the Federation of Rental-housing Providers of Ontario.

If you thought deciding to finally sell your home was a tough decision, wait until you try to decide what its really worth.

Should you set the price high, expecting prospective buyers will want to bargain you down before closing? Or do you start low to attract attention and get the inevitable discounting over with upfront?

Starting high with the idea that you can always drop it later can be a costly mistake since it can quickly take you out of the market. That's why, notwithstanding their interest in a quick sale, most realtors advise setting a fair price from the outset.  

And just how good a negotiator are you anyway?

Most of us have strong ties to our homes, and they invariably get in the way of the ultimate goal, which is to sell, says Marnie Bennett, a top-selling broker with Keller Williams VIP Realty in Ottawa.

Too often, sellers can unknowingly hinder their sale by making decisions based on emotion rather than logic, she maintains.

Real estate aggregator website Zoocasa continues to alienate just about everyone else in the real estate business.

When Zoocasa first launched, the syndication service said it would work in tandem with the real estate industry in Canada. But lawsuits between it and Century 21 quickly showed that not everyone saw things the same way.

Now, it’s real estate appraisers that are pointing the finger, criticizing the company’s recent launch of its Zoopraisal service that allows both prospective buyers and nosy neighbours to receive instant estimates of a house’s worth using existing appraisal data.

The Zoopraisal service also lets you refine the estimated value of a home based. For example, if you've added a bathroom, you can refine the value based on this change.

The cost of home ownership in Canada is on the move again.

The proportion of pre-tax income required to handle the costs of owning a home jumped last quarter for all types of housing tracked by RBC Economics housing affordability index.

The biggest jump was once again in Vancouver with the cost of mortgages payments, utilities and property taxes for a bugalow coming in at close to 93% of a typical household’s monthly gross -- up 10.4 percentage points from the previous quarter.

In Montreal, home ownership cost roughly half that eating up 43% of a typical family’s income, up 1.4 percentage points from the first quarter. Other major cities in the survey include: Ottawa (41%), Calgary (37% and Edmonton (34%)

Just think: every eight seconds, one more boomer turns sixty.

And, while that may signal trouble for some, most believe they’re just getting started at this age. So instead of retiring, it's more like graduating. And that means moving away from home.

Moving touches every part of your life, however, and not all aspects are necessarily for the better.

That’s why, if you're thinking about picking up the stakes and relocating in your retirement years, it's never too early to start planning, says author Barbara Corcoran in her book NEXTVILLE: Amazing Places to Live the Rest of Your Life.