Right now is the perfect time to dig deeper into buying a pre-construction condo in Toronto. Start your research as it is one segment of the Toronto real estate market that just hasn't slowed down.
How Vulnerable is the Toronto Housing Market?
Dated: March 31 2021
According to a recent Housing Market Assessment from the Canada Mortgage and Housing Corporation (CMHC), the Toronto housing market is nearing a very high degree of vulnerability.
The CMHC highlighted Toronto as the most overheated market in Canada’s major metropolitan cities, much like a claim presented in the UBS Global Real Estate Bubble Index last year. The surplus rental properties and ballooning house prices support the idea the city is in the middle of a housing bubble.
The CMHC reports that overheating in the housing market is an issue nationwide, even as multitudes of buyers are fleeing the city for greener pastures and homes.
Royal Bank of Canada reports that real estate prices are rising the fastest in small towns like Tillsonburg, Ontario, Moncton, New Brunswick, and Mission, British Colombia. As prices surge, the demand is also surging as buyers are opting to act fast to not miss out on any available homes. Buyers are also quickly buying available properties as they expect prices will continue to escalate, which continues to drive up mortgage borrowing - now at its most robust rate in almost a decade.
Royal Bank of Canada economist Robert Hogue added that an overheated housing market could damage the economy as the housing market corrects. Hogue also suggests that the government allow more supply - particularly in affordable rental housing and medium density options in big cities. He also supports more mortgage restrictions, which include higher down payments and lowering limits on refinancing.
Hogue also provides some ideas that may be more contentious but may be imperative for reducing market volatility in the future. Some of Hogue’s ideas include eliminating investors’ option to write off their mortgage interest on their taxes and reconsidering the principal residence exemption from the capital gains tax. Hogue also mentions not providing any more assistance to first-time homebuyers, which would continue to drive up the demand and housing prices as supply continues to dwindle.
Latest Blog Posts
COVID-19 reshaped the Canadian housing market, and its effects are far from over. A survey by Royal LePage supports that approximately 25% of Canadians aged 25-35 bought homes during the pandemic.