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.
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