The current figures shown by the Toronto real estate sector revealed that the markets continue to be in an overdrive state, with an increase of home price in the city by 20.9 per cent year-over-year in January, as disclosed in the current copy of the Teranet-National Bank Composite House Price Index.
The benchmark price for which homes were resold for in Toronto saw an annual increase of 22.6 per cent in the previous month.
The chief economist at BMO Capital Markets, Doug Porter penned in a research note; “Let’s drop the pretense. The Toronto housing market – and the many cities surrounding it – are in a housing bubble. Toronto and any city that is remotely within commuting distance are overheating, and perhaps dangerously so.”
He gave strong cautioning in light of the numbers shown.
He added; “A random sample of homes that sold this month alone shows a median selling price of 25 per cent over asking, with not one staying on the market longer than eight days. Even pigs are flying in this hurricane of a market.”
Simon Deeley, the fixed income strategist at RBC Dominion Securities pointed out that Toronto housing and consumption have proven “unexpectedly resilient” – as quoted – to the change of policy which was implemented to ease intensified activity in these areas. Deeley made mention; “Looking forward, we are forecasting a slight dip in consumption growth and a meaningful contraction (0.3 of a percentage point) in residential investment in 2017, alongside a moderation in resale price growth.”
The senior Canada economist for Capital Economics, David Madani contended by disagreeing to the assumptions underlying changes in mortgage rules by the federal government, the numbers by TREB showed that millennial buyers are not the reason behind continuous price increase in Toronto.
David further said; “[First-time] home buyers aren’t the ones driving the biggest gains in Toronto house prices, based on the simple logic that they simply don’t have high enough incomes to afford them, by any mortgage lenders’ standard. Existing homeowners, by leveraging their considerable housing equity to buy newer, bigger or more beautiful homes, are the primary driving force now boosting house prices in Toronto,” he added, “If that’s the case, then it also stands to reason that there cannot be a major shortage of houses for people to live in.”