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[URBAN NOTE] “Toronto area in housing bubble, say BMO Capital Markets economists”

CBC News notes BMO Capital Market’s argument that Toronto is in a housing bubble.

Housing prices in Toronto and surrounding cities are rising at a “fiery” rate not seen since the late 1980s, according to the chief economist at BMO Capital Markets.

“Let’s drop the pretence,” Douglas Porter wrote in a commentary. “The Toronto market — and the many cities surrounding it — are in a housing bubble.”

“Everyone may have a slightly different definition of what a bubble is, but most can agree it’s when prices become dangerously detached from economic fundamentals and start rising strongly simply because people believe they will keep rising strongly, encouraging more buying,” he said.

[. . .]

Porter downplays industry suggestions that a lack of new housing is the reason behind the big appreciation in prices in the GTA, pointing to strength in housing starts.

“The massive price gains are being driven first and foremost by sizzling hot demand, whether from ultra-low interest rates (negative in real terms), robust population growth, or non-resident investor demand,” he wrote

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Written by Randy McDonald

February 19, 2017 at 6:15 pm

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