The concern that has been framed as a question for the past few years is now being expressed as a statement. “Is there a housing bubble?” has become, “there is a bubble”.
Well-known economist Doug Porter recently used the “B-word” to describe the Toronto market. The Greater Toronto Area has become the central attraction for market watchers, replacing Greater Vancouver. It was just announced that the average price for any form of new, ground-level housing – detached, semis, townhouses – in the GTA has surpassed one million dollars.
Builders are reporting record low inventories and complain that not enough land is being opened up for development. But unrelenting demand appears to be the real driver of price, not a shortage of new homes. Even where there is good supply – in condos for example – prices are climbing to record levels.
Speculation has been pegged as a troubling price driver. Given that new listings are down significantly because “move-up” buyers cannot afford to make the upgrade and first-time buyers are stepping back because of discouraging regulations, investors seem to be the likely culprits.
So the new question is “what will the government do?” Can Toronto look forward to any Vancouver-like measures to tame market?
Right now, it does not look like it.