A sea barge with three homes is tugged out into the Pacific Ocean waters of the Strait of Georgia near Richmond, British Columbia August 1, 2012. The middle house, a heritage home originally from Vancouver, was saved from demolition after it was purchased by Ben Ford and his wife Jen. It was lifted off its foundations and transported by truck to the Fraser River where it was loaded on a sea barge and transported to Union Bay, near Comox on Vancouver Island. Reuters/Ben Nelms Vancouver's housing market is in an "outright bubble," according to Gluskin Sheff's David Rosenberg.

In a Bloomberg TV interview on Wednesday, Rosenberg said that although the overall housing market is not frothy, Toronto and Vancouver are definitely in overheated territory.

"At some point, there will be some mean reversion," he said, describing a return to more normal prices.

"I'm not saying it's around the corner, but the markets are extremely expensive."

Both markets are two of Canada's tightest and most expensive. The national average sale price of Canadian houses rose 13.2% in May year over year, but gained 9.1% excluding Vancouver and Toronto, according to the Canadian Real Estate Association.

Bank of Canada Governor Stephen Poloz warned about the situation in his policy statement earlier in June.

Poloz addressed two issues: First, he cautioned against buyers who are entering the market while betting that prices would continue to rise — who could be planning to flip houses later for a profit.

He also noted that mortgage debt was rising among households that already have piles of debt that would struggle if they lose their incomes, or if interest rates rise.

Poloz said rising household incomes and gradually interest-rate hikes should reduce households' vulnerability.

And while the central bank could raise rates for a range of reasons, Rosenberg suggested that cooling the housing market would not be one of them. Higher rates would push up the Canadian dollar and make manufacturers less competitive, he said — an outcome the Bank of Canada won't be going for.

The Canada Mortgage and Housing Corporation has tried to cool the market through credit rationing, in part by limiting the dollar amount of lender mortgages the government guarantees.

"I think they're amazed that the measures they've taken haven't really had much of an impact yet," Rosenberg said.