“This [Toronto] suite is currently listed for 2 million one hundred thousand dollars.”
“Amy and Chris Poole are looking for a more modest place in Toronto. They are currently living in a small furnished rental with their 2-year-old daughter.”
Amy Poole: “We want our stuff, we want to unpack our belongings, we want our home, we want to plant our feet.”
Amy and Chris have lost out on 4 offers and backed out of 3 others. They say competition at open houses is so intense they’ve seen things get physical.”
“Most economists agree that real estate values will almost certainly be higher in 20 years, so for a young couple looking to invest over the long term there’s really no bad time to buy, that is if there is something they can afford to buy.”
“[According to that argument] Toronto is the tortoise that has caught the hare, with real estate prices now in keeping with cities like New York and San Francisco.”
“But David Madani, of Capital Economics, isn’t so sure Canada can rely on slow and steady growth.”
David Madani: “We essentially think it’s a bubble, we think the market is being driven by psychology and being fuelled by cheap credit. So the market is borderline irrational. We see the sharp run-up in house prices relative to incomes, we see the run-up in household debt which is now just as high as it was in the United States, we see the same run-up in the home ownership rate, and finally we see the overbuilding.”
- BBC, 22 May 2012
A measured and only slightly cautious piece. But this is the BBC and we don’t expect histrionics.
Interesting in a few ways.
Despite the state of the markets, we still have the urgent buyer psychology.
Again, we have cautious commentary from outside of Vancouver. Every time this happens we are painfully aware of the lack of bearish public voices from within our city. We’re apparently living in a zone of relative silence.
We agree completely with Madani. “A bubble driven by psychology and cheap credit.” Exactly. We would have added low rental yields as a more important fundamental than overbuilding, but the case is the same.