People who buy a home in Canada aren't merely owning a place to live, but rather controlling a seemingly ever-appreciating asset class, as the cost of housing in many Canadian cities continues to soar, according to Bay Street economist David Rosenberg. 

"Housing has become not just a place to live in Canada, it's become like an asset class, and probably too much of an asset class," said Rosenberg, chief economist and strategist at Rosenberg Research and Associates Inc., in an interview on Friday. "We've deviated way too far in terms of pricing and where nominal growth is in the economy."

Rosenberg's comments come as the price of a house in Toronto soared to a record $1,163,323 in November, up nearly 22 per cent from a year earlier, according to Toronto Regional Real Estate Board data released Friday. Toronto wasn't the only city in Canada to report steep housing price hikes in November, with the average price of a home in Vancouver climbing 16 per cent to $1,211,200, while Calgary prices were up nine per cent to $461,000, according to those city's respective real estate boards.

Cooling Canada's housing markets has been a debate years in the making, with some analysts pointing to the Bank of Canada raising interest rates as a way to make homes more affordable for the average Canadian. Based on forward overnight index swap rates, investors expect the Bank of Canada to raise rates five times over the course of 2022, according to Bloomberg data.

However, Rosenberg cautions that rate hikes are unlikely to move at that pace, given the amount of outstanding debt Canadians have taken on. Statistics Canada said in August that Canadian households carried approximately $2.5 trillion in debt one year into the COVID-19 pandemic, about two-thirds of which was tied to mortgages. 

“We had a mountain of debt before the [COVID-19 pandemic] that prevented a normal policy move in the last cycle. Now we're choking on even more debt," Rosenberg said. "Central banks might want to raise rates (but) they won't raise them as much as what the markets got priced in."

Rosenberg - who rose to prominence through a series of bearish market calls during his time as a Merrill Lynch economist in 2007-2008 - expects the Canadian economy to underperform next year. He’s predicting equity valuations will be "quite weak" and that the housing market landscape will be much different from what homeowners are seeing currently. 

"When I tell this tale, people say 'Well, you're like the boy who cried wolf.' To which I say, 'Just remember that the wolf shows up at the end of the story,'" he said.