Recently?Do you mean 2009?Or have I missed something more recent?
Toronto and Canada generally cannot suffer the sort of bubble and foreclosure crash that happened in the US in 2009.We have strict, and I think sensible, regulation in our banking sector.New terms increasing minimum down payments and maximum payment amounts v/s income have been added to reduce the risk of purchasers getting in too deep.
Can Toronto home prices go down?Of course.If there is a severe economic downturn with rising unemployment demand will drop and pressure to sell will rise causing prices to fall.
The most recent time was 1988 – 89.
The housing market crash in the US back in 2009 was a resulting of bad banking.Too many people were being given mortgages they couldn’t afford, and when they defaulted on those loans (ie.couldn’t pay the interest on those mortgages) the banks lost a lot of money and collapsed.
The Toronto housing bubble is nothing of the sort.A “bubble” refers to when something (typically real estate) is being valued and sold for a lot more than what it is ultimately worth.Homes in Toronto are in such high demand that they’re being sold for way more than they’re actually worth.
This is not a great situation, but it won’t lead to a housing crisis.What will happen (most likely) is that eventually the bubble will “pop” and demand will fall.Home prices will drop drastically as a result and there will be both winners and losers.
A city’s various housing markets cannot be compared to those of a whole country.Every real estate market is affected by many economic factors: government actions (laws, rules, bank policies, infrastructure projects), vacancy rates, major employers expanding or reducing staff, interest rates, time of year, etc.As long as Toronto continues to be a well-managed, economically prosperous, desirable place to live, the real estate markets in the city will continue to do well.
There will inevitably he some expansion or contraction, but based on current economic indicators, there should be no reason to expect a collapse.Canada is much more well-managed than the U.S.
I don’t beleive so.First, the primary reason for the US housing market collapse was bad mortgages.This lead to wave after wave of foreclosures that flooded the market with cheap homes, crashing prices.
Canada has much stricter banking regulations (actually some of the safest banks in the world) which prevent similar situations from happening here.Since the market can’t be flooded with an increased supply of houses, the only other way the market could collapse would be if demand were to suddenly drop off.I just can’t see that happening.
I do think the market will cool off eventually with slowly decreasing demand, but a big drop in demand?
I am a Realtor in North Texas and we have not had any kind of collapse.I have not heard of any such thing in any part of the USA recently.