by Bank of Montreal Chief Economist Douglas Porter that Toronto鈥檚 red-hot housing market is indeed in a 鈥渂ubble,鈥� other economists have been hesitant to use the controversial label to describe the city鈥檚 current real estate boom.
One of those experts, Dana Senagama, a principal market analyst for the Canadian Mortgage and Housing Corporation (CMHC), says 鈥渋t implies that there are no fundamentals to support it and that鈥檚 not the case here in the Toronto housing market.鈥�
Senagama cited the city鈥檚 strong employment rates, slow inflation and historically low mortgage rates as evidence of Toronto鈥檚 vibrant economy. However, Senagama does recognize that there are some valid concerns about the housing situation.
The market analyst referred to overvaluation, price overheating and price acceleration in the housing market as 鈥減roblematic conditions鈥� to keep an eye on.
鈥淲hatever decision you make, whether you鈥檙e a home buyer or a seller, base your decisions wisely on the information we (the CMHC) provide,鈥� Senagama told 麻豆影视 Channel on Thursday.
On the foreign buyers鈥� tax:
As the average price of a home in Toronto continues to rise and Vancouver鈥檚 market continues to cool, the Ontario government is being urged to establish a tax on foreign investment similar to the one introduced in British Columbia last August.
In addition, Toronto Mayor John Tory told reporters at City Hall on Thursday that he was weighing the possibility of a new tax on owners of the estimated 65,000 vacant homes in the city that would be similar to Vancouver鈥檚 tax and would be in Toronto鈥檚 鈥渓egislative domain.鈥�
The average price of a home in Toronto jumped 27.8 per cent year over year from $685,278 last year to $875,983 according to the Canadian Real Estate Association. By comparison, Vancouver saw a drop of 9.8 per cent year over year, with the average price of a home falling from $1,104,133 last year to $995,583.
to consider the possibility of a foreign buyers鈥� tax for the Toronto-area in the upcoming provincial budget, but Senagama is unsure of the effectiveness of such a measure.
鈥淭he problem we have in Toronto and pretty much across Canada is that we don鈥檛 have the data on foreign investments, comprehensive data,鈥� she explained.
Senagama said they have started collecting information on foreign investments for condos in the city but they鈥檙e lacking data for all housing types.
鈥淲e don鈥檛 know exactly what the level of foreign investment is, so therefore, without knowing that it鈥檚 difficult to forecast and say what the impact would be based on a tax,鈥� she said.
On interest rates:
When asked about the potential impact of rising interest rates on Toronto鈥檚 housing market, Senagama acknowledged that, historically, the demand for homes tends to take a hit and prices will be affected. However, she said the current economic conditions suggest that interest rates won鈥檛 be increasing anytime soon.
鈥淲e are in an environment where we鈥檙e going to see low rates for a long time,鈥� she said.
On the forecast:
For 2017, Senagama predicted that the Toronto-area will continue to see sustained growth in both home prices and sales. As for 2018, she suggested that the winds of change may be in the air.
鈥淲here we will start to see things somewhat slow down is 2018 when a lot of the affordability concerns will have an impact on home-buying demand,鈥� she said.
