Canada’s housing market is showing all the “classic signs” of a bubble, according to a report released Monday by Bank of America’s Merrill Lynch. “We estimate housing prices nationwide are about 10 per cent over valued,” the report says. Even so, the bank doesn’t expect Canada to go through a large-scale housing crash as the U.S. did during the recent recession. The report, however, does predict housing prices will dip five per cent in 2012. This drop will be spurred by increasing household debt in Canada, as well as potential jumps in joblessness as the global economy flirts with recession, according to the report. Much of the “over valuation, speculation and over supply” cited in the report relates to the condo industry, which has been booming in cities like Toronto. Once the investment surge in condos cools off, there will be an oversupply of units, and some people who purchased condos “will be left holding vacant units,” says the report. As a worst-case scenario, the report points to a housing price drop of 10 per cent nationwide in 2012 alongside soaring household debt and job losses.