[URBAN NOTE] “Nobody’s cheering, except real estate agents: The ‘trapped wealth’ of Toronto’s unrelenting housing boom”
The National Post hosts Theophilos Argitis’ Bloomberg News article looking at the causes of the housing price boom and speculating about ways to end it without wrecking the wider economy.
Prices in Canada’s largest city surged more than 20 per cent over the past year, the fastest pace in three decades, data released last week show. Some of the city’s neighbouring towns are posting even bigger gains.
It’s become a matter of considerable alarm. Stability is one concern: if the market tumbles, so will Canada’s economy. Pricier real estate also drives away less-affluent, younger people and boosts the cost of doing business, eroding competitiveness.
“I don’t think anybody is cheering,” said Doug Porter, the Toronto-based chief economist of Bank of Montreal, who used the dreaded “bubble” word last week to describe the market. “I don’t see who benefits other than real estate agents. It’s trapped wealth.”
So, what’s driving the boom? The housing industry — builders and brokers — claim lack of supply is the main culprit. Others, Porter included, see demand as the problem. Lately, evidence is mounting that speculation is behind the jump.