Tuesday, September 1, 2015

Fears of Toronto housing collapse ‘exaggerated’: Report

Posted in TheStar.com
By: Susan Pigg Business Reporter, Published on Fri Aug 28 2015

The biggest risk to the housing market would be a “sharp increase in unemployment or interest rates that erodes demand.”

New condo prices continue to rise and sales of resale condos hit a new record in the second quarter of this year, which shows that supply is now more in line with demand in the Toronto market, says a new BMO report.

Fears that Canada – and Toronto in particular – has a housing glut that could lead to a catastrophic U.S.-style downturn are “exaggerated,” says a new analysis of the national real estate market by BMO.
In fact, an “elevated inventory” of new condos, which set off alarm bells earlier this year, is now correcting itself and those units are needed to compensate for the lack of single-detached homes, says the bank’s senior economist Sal Guatieri.

The evidence that supply is actually returning to more balanced territory, where supply is more in line with demand, is the fact that new condo prices continue to rise, albeit moderately, and sales of resale condos hit a new record in the second quarter of this year, he says in a housing note released Friday.

Prices of resale condos actually rose the fastest that quarter, year over year, that they’ve increased in three years, up 6.8 per cent, he noted.
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