Toronto Housing Market is Falling, or Is It?
The Toronto housing market has shifted to a lower gear. The last ten years have been nothing short of frenetic, and in the opinion of many, just plain insane. And there is really no other way of characterizing the buying and selling frenzy we are all so familiar with, such as a Toronto condominium at Yonge and Lawrence that sold for more than Five Hundred and Forty Thousand dollars above the asking price! This example is by no means an isolated case.
In the last seven years I have witnessed many similar sales – enough to fill a book. The trouble is that when we try to make sense of it all, there is so much information and varied opinions from experts, that it becomes next to impossible to get a clear picture of the Toronto real estate market.
Here are some recent comments on the state of the Canadian housing markets by three noted economists.
Royal Bank economist Paul Ferley thinks that 2009 will finally bring a significant drop in Canadian activity, but nothing like the U.S. collapse, with starts (new construction) down by about 15 per cent. Benjamin Tal, a senior economist with CIBC World Markets, predicts prices will continue to fall across the country with Alberta leading the way.
“Canada’s housing market is running into some seriously foul weather amid the weakest affordability in nearly two decades,” said Doug Porter, deputy chief economist with BMO Capital Markets. “Given the steep run-up in new listings, double-digit sales declines and the sharp drop in consumer sentiment, price declines may become a more common feature across the country in the months ahead.”
Business confidence is high
The commercial market, which normally reflects the general mood of the real estate market, shows a high level of confidence. The Toronto Real Estate Board Commercial Members reported 1,072,321 square feet of Commercial space traded in July 2008. This was a 21 per cent increase over the same month in 2007.
“July was second highest total for leased space in 2008, and the second month in a row that broke the 1,000,000 square foot thresh-hold,” noted Commercial Council Chair Garry Lander. Prices were mixed in July, with Industrial space (all size categories) averaging $5.45 square foot net, down seven per cent from the same period last year. Meanwhile prices for leased Commercial space rose 23 per cent to $19.83 square foot net.
The Canadian housing market did not commit the lending sins and fraud that have created such chaos in the U.S.A. In Canada we do not have the same conditions that would trigger a similar housing collapse.
Of course, all of this can change almost overnight depending on the price of oil, and whether the economies of India and China can continue expanding at today’s pace.
I want to save you time and help you stay abreast of this information wave. If you want to stay on top of the market, there is no need for you to scan three national newspapers, visit five online sites, or read three more newsletters. I will be writing and commenting regularly on the state of the Toronto housing market in order to help you with your home buying or selling decisions.
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Rosalin, it is always a pleasure to read your blog. I really love your work here. And the dedication you present by writing what you wrote at the end. As I have already mentioned here, I specialize in Toronto condos and indeed some of the sales that occurred were just plain wacky. Though the market is slowing and some “optimistic” economists say falling, I remain optimistic. I can`t wait for your next post. Read you later.
Elli
Hello, can you please post some more information on this topic? I would like to read more.
Thank you for your comment Gary. I posted a new article dealing with our Toronto real estate market recently; “Toronto Real Estate Market Close to Reaching Boiling Point Again” Hope you get a chance to read it.