The Toronto Housing Market Is About To Collapse By This Measure
With the collapse of Home Capital Group focusing the world’s attention on the Canadian real estate market, nowhere is the subprime debt time bomb more likely to go off than Toronto, which as we recently noted “has gone nuts.”
Even Bank of Canada Governor Stephen Poloz (who declined to comment on questions about Home Capital Group and whether he’s worried about contagion), noted that Toronto is out control tonight while answering questions following a speech in Mexico City…
“pretty sure recent gains in Toronto home prices were not sustainable and that the city’s housing market had elements of speculation““Financial stability is part of the Bank of Canada’s monetary policy decision making, but the central bank’s primary mission is inflation targeting,… it would be odd to use interest rates to target home prices in just one city.”
Perhaps Mr. Poloz… But, as we noted previously, it doesn’t take a genius to figure out that this will end in tears. Even the big Canadian banks are fretting. “Let’s drop the pretense. The Toronto housing market and the many cities surrounding it are in a housing bubble,” Bank of Montreal Chief Economist Doug Porter warned clients. But the bubble’s deflation would push the city into a fiscal and financial sinkhole
Jason Mercer, TREB’s Director of Market Analysis, explained the basic supply and demand problem:
“Annual rates of price growth continued to accelerate in March as growth in sales outstripped growth in listings,” he said.“A substantial period of months in which listings growth is greater than sales growth will be required to bring the GTA housing market back into balance.”
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