Experts Warn of Housing Price Increases and Decreases

Toronto Skyline

Am I the only one that’s confused?  I never bought into the “bubble mania” that the industry “experts” were selling, but now there’s talk of a housing shortage in the Toronto market driving prices up to Vancouver levels.  The Toronto Star‘s Sunday edition featured the front page warning.

Developers aren’t stupid.  Along with the financiers that control them, they won’t break ground until they’ve sold the majority of their project.  The steady pace of new housing starts wasn’t done on speculation.  The healthy levels of new home and condo developments have been based on pre-sales to qualified mortgagors with substantial deposits.

The bulk of these new housing starts are for Canadian owner occupied residences.  Thanks to Jim Flaherty’s Canadian caution, our mortgage rules are tighter than ever.  This is particularly true for non-owner occupied investment properties.  In order to buy a rental property the investor need a minimum of 20% cash downpayment, reducing the rate of return and discouraging condo speculators.

Reality must be soaking in as fear of a bubble mania turns to fear of a shortage.  A balanced housing market doesn’t make an exciting headline.  The only rational explanation given is that the condo market will fill up with first time buyers and when they’re ready to up-size to a single family home we won’t have the supply.  While there is truth to the notion that Toronto real estate prices will go up its no reason to panic.  It’s just evolution.  Like in New York London or Paris, they’re not building any more land in Toronto.  City living will be relegated to condos and apartments with brownstones and houses going to the wealthy.

2 Responses to Experts Warn of Housing Price Increases and Decreases

  1. Donna says:

    so, what’s driving the ‘bubble’ talk ?

  2. Really interesting!!This is very helpful post. More interesting word you say more traffic you will get from your comment.
    Housing Prices

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