Monday, 13 January 2014

Anatomy of the Housing Bubble

This video from BNN tries to get to the bottom of Canada's housing bubble debate. As in many cases with the mass media, BNN presents an oversimplified and amateurish viewpoint.

Two questions were asked in the video:

1. What is driving the housing market?

2. Who is buying all the properties?

As answered in the clip - immigration drives the housing market and no one knows who is buying all the properties.

I disagree! Immigration is not the main driver of the housing market. What's driving the market is the perception that real estate is an ultimate investment and that being a homeowner is superior to renting.

With regards to who is buying all the properties, well new condos in Toronto's core were mostly sold to investors. For instance, at least 50% of condos at CityPlace were sold to investors according to the 2011 census! So yes, there are reliable numbers out there!

Anyway, I think these two question are the wrong ones to ask. The proper questions would be 1. Is the current housing price growth sustainable? and 2. Are the current housing prices supported by fundamentals?

Of course my answers would be No and No!

Also the video suggests that the Toronto condo market might be overbuilt but that doesn't mean that the prices are out of whack in the rest of the country. Wrong! The housing bubble in Canada is truly nationwide. Check out the home prices charts for various Canadian cities here and here.



The information presented on this website is purely for entertainment purposes and should not be considered as an investment advice or any kind of advice at all. Statistics presented on this site are not guaranteed to be accurate, and there could be errors in the information presented on this site. However authors do try to present information as accurately as possible. The opinions of the authors and commentators are just that, opinions! Please always make up your own mind about things in life, and never take things for granted, including on this site. Hope you have a great day!

Contact Me

You can reach the authors of this site by emailing to: torontocondobubble (at) Authors of this website try to cite all their information sources to the best of their abilities. If for some reason you believe we infringed on your copyright, please email us and we will fix it as soon as possible!

Privacy Policy

Please familiarize yourself with our Privacy Policy