Hypothetical Price Increase Faced By Toronto

Toronto home prices are not yielding to change as home prices has increased by 20% over the past year. This rapid growth is the fastest to be seen in the past thirty years. But the home prices are not only faced in the province but other neighboring markets are also feeling the pinch.

The pricing situation in Toronto is becoming worrisome as a sharp drop in the real estate market will affect the overall Canadian economy. Furthermore, high home prices drives always young talented people and also increases on the cost of staring up businesses and getting rid of competition.

According to Doug Porter, the Toronto-based chief economist of Bank Montreal stated that “I don’t think anybody is happy about the situation.” Only real estate agents are benefiting from the high prices.

This makes many to wonder, what is really fueling home prices? For constrictors and agents, the shortage in home supply is the main factor to be blamed while Porter and few other experts believe that high home demand is the reason.

But recently, there are new claims pointing fingers towards supposition. Many market onlookers are projecting further price increases and this many claim is adding on home prices as buyers rush to purchase the available homes before additional increases are made.

Home constructors are also hindered by several restrictive regulations or specific lands which creates a limit on the available land for construction.

But a lack of supply is most definitely not the reason for the high prices of condominium properties as there was a huge flood of new supply on the market. However, the average price for condos rose by 15%. In the past two years, there were 54,000 apartments units built in Toronto.

There was also a drop in new home listing in January by 17% which is the biggest decline since 2002.
David Madani, an economist at Capital Economics in Toronto has given out a warning that Toronto is heading towards a housing bubble.


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